Withdraw from ISA to fund Regular Savers?

7sefton

Hello - some advice on the following would be very much appreciated:

I have about £20k in the Cheshire ISA paying 2.5%.

I also have regular savings accounts with Cheshire & Derbyshire (5% each, £100-£500 deposit each month), Nottingham (6%, £10-£100 pm) and First Direct (7%, up to £300 pm). Each of these accounts have at least 8 months left to run.

So far, I've been filling up these regular savers with the maximum deposits each month from a 'drip feed' account. I'm now getting to the stage where this drip feed account is empty, and I'll drop down to depositing the minimum amounts just from my salary.

However, I'm really tempted to withdraw £1400 from my ISA this month and perhaps next month too, so I can deposit the maximum in each regular saver for a few extra months. The interest rates on these accounts leave ISAs in the shade, but I'm obviously conscious of losing the tax free status on this money.

So basically, in today's low rate environment, what is the actual value of keeping money in an ISA when the rates elsewhere can beat it?

What would you do?

Thanks in advance.

Porcupine

Are you likely to max out your cash ISA next year? In other words if, at the end of all this, you'd want to pay back into the ISA, would you have the allowance for it? Would you have spare allowance in future years? Are you likely to want to use S&S at any point?

You can do the sums as to ISA rate without tax for N years, and projected regular saver rate minus tax for those N years, and see which wins. Don't forget with a RS you can't dump in the whole balance straightaway, it has to sit in a non-ISA savings account while waiting to turn into monthly payments.

I have a 5% non-ISA account (fixed rate but with small withdrawal penalty), which makes it 4% taxed. A while back I decided not to transfer this to my ISA at 3.x%, even though I had spare allowance. So I'm down on the amount inside the ISA wrapper, but I reckon having more overall (even after tax) makes up for it. It does depend whether you intend to keep the ISA for 3 or 30 years though.

fiesta04

It would only really make sense if you are a non tax payer. There is still a slight gain if you do pay tax, but not worth losing the benefits an ISA gives you over time.

Do not really understand why you opened as many Reg Savers as you did only to run out funds after only 4 months.

F4