Flexclusive ISA at 4.25% for 6 months or FlexDirect 5% for 12 months?

Wammer

I really need your advice as I am now totally confused as to the way forward.

The OH and I each have the Flexclusive ISA at 4.25% till 31.10.13 then 1.5% above BOE base rate till 01.01.14.

I was intending subscribing the 2013/14 ISA allowance to it till at least October. However finding that the new FlexDirect is paying 5% on £2500 for 12 months on more than one account is making me think twice. We have one FD each at the moment and I am thinking about opening more.

The new subscriptions would be funded from our LTSB Vantage accounts. I currently have 3 x £6000 @ 4% and the OH has 3 x £5000 @ 3%.

I haven't yet worked out how much to take out of each Vantage account to make up the £5760 for this year's ISA if I go that route.

However what I need to work out is whether it would be better to fund another 2 FD accounts each, 2 x £2500, at 5%. That would be 4% net after tax for 12 months compared to 4.25% in the Flexclusive ISA for 6 months or so till 31.10.13.

I have just opened 2 FD accounts for the overdrafts and now have £1750 and £1500 available from those to find a home for.

Just for clarity, I operate all the accounts for both of us and the OH is happy leaving me to it.

I would be grateful for any thoughts on how best to proceed.

rb10

Why not have both?

Take money out of the 3% account to put it in at 4.25% and 5% - can only be a good thing for the interest you receive.

Wammer

Thanks for that. Now you see why I needed to ask. I can't see the wood for the trees and didn't see that.

How should I split it? £5760 to each Flexclusive ISA and £1737 in each FD, leaving £1 in each Vantage just in case I need it again?

Or £2500 in 2 new FDs and £5000 in each Flexclusive ISA?

innovate

You have enough to fill the Flexclusives with £5,760 each [after April 5], don't you? And still fill the FDs with £2.5K each.

I would definitely leave £1 in the Vantage accounts, they could continue to be very valuable.

rb10

List out the accounts you have, in order of their net rates (assuming you are a basic rate taxpayer):

Flexclusive ISA - 4.25%
FlexDirect - 4.00%
Your Lloyds TSB accounts - 3.2%
Your OH's LTSB accounts - 2.4%

Now fill up the accounts, starting at the top of the list (i.e. the highest interest).

So put the maximum ISA allowance into the Flexclusive ISAs, then put £2.5k into each FlexDirect account, and the rest into LTSB.

Wammer

Thanks both. It's starting to get clearer now.

So you think it's still worth maxing the Flexclusive ISAs even though that rate is only for 6 months rather than maxing the FDs for 12 months?

What is we got another 2 FDs each rather than one, which would be 2 x £2500 each?

Gromitt

You can transfer or withdraw from the ISAs once they have matured and stuff it into the FDs if you wish then. Personally I'd leave them in the ISA wrapper. If deals get better you can transfer the lot rather than just a years worth.

rb10

Wammer wrote: »

Thanks both. It's starting to get clearer now.

So you think it's still worth maxing the Flexclusive ISAs even though that rate is only for 6 months rather than maxing the FDs for 12 months?

What is we got another 2 FDs each rather than one, which would be 2 x £2500 each?

You can do both.

Between you and your OH, you have £33k in LTSB earning 2.4% and 3%.

So you have plenty of money to fill up your Flexclusive ISAs, and fill up whatever FlexDirect accounts you have as well.

innovate

Wammer wrote: »

What is we got another 2 FDs each rather than one, which would be 2 x £2500 each?

You could try it since people have been paid the 5% on multiple accounts. It's not certain that they will continue paying for more than 1 per person though.

I got a similar set up to yours, and will definitely put £5,760 into the Flexclusive. Come October, I will either transfer to another cash ISA, or move the lot into an S&S ISA. But you could equally consider to move some money back into the Vantage accounts - all depends on rates available in October.

Wammer

Thanks

For some stupid reason, in my head I am trying to keep the 4% Vantages intact, when in reality they are only earning 3.2% net.

Thanks for all the advice. I now see (I think) that I need to subscribe £5760 to each Flexclusive ISA and £2500 to each FD account.

We already have one FD maxed at £2500 and just opened another today for the overdraft. I thought I would be able to open another 2 FD accounts each. However I have just looked at the T&Cs which state,

"You can open up to four Nationwide current accounts, however you are only guaranteed the 5% AER promotional interest rate on one FlexDirect account."

As we also have a joint FlexAccount, does this mean we can only have 3 FD accounts in addition to that?

If that's the case, then perhaps I would be better not using the overdraft facility and maxing it instead?