Savings - When to switch?

EdgarTPeaceful

Hello,

New to saving (although really this money we have is property money waiting for a new mortgage, in time).

6 months ago we put c.£60K in 2 M&S cash ISAs and a Tesco Savings account. Neither of these accounts are paying the best rates anymore.

Reading the Tesco Savers - it says it pays interest on the last day of March each year. Should I pull the money out as soon as the interest is paid at the end of March and move it to a higher rate saver? Suppose I don't move it for a month, what happens to the interest owed for that 'extra' month.

As you know, we're entering a new ISA year. Anyone know when the M&S ISA interest is paid? In mid April I would plan to transfer both ISAs (2012-13) and add sums for 2013-14 to a new ISA - probably Santander.

I'd be grateful for any advice / answers to my queries. I'm trying to mitigate against inflation until we can buy a new property.

Thanks.

innovate

You are making a very common mistake - - thinking you only get paid interest if you have your money in the account on the day interest gets paid.

Interest is calculated on the available balance on a daily basis, and accrued over the time the account is active.

You can move your money anytime you like, and you always get paid the interest due to you. On instant access accounts, that is all the interest you have earned, less any tax that might get automatically deducted. On fixed-term accounts, if you move the money before maturity, there is generally a hefty penalty, e.g. 180 days of interest.

I think both your accounts are instant access ones, so there is no need to wait for interest payment dates.

EdgarTPeaceful

Thanks - that makes sense.

Now I've got to summon the will to go through the application process all over again! It looks like we'll have to work out something with 2 x Santander ISAs and the rest in the Santander 1/2/3.

Edgar