Isa question

Lokolo

Financially_Clueless wrote: »

If anyone can tell me what the calculation is (to get the interest percentage) for me getting £1.93 in 9 days from a cash ISA, Having just put in a lump sum of £4500?

As just above this post.

You work out annual interest. Divide by 365 days. Then times by the number of days.

So £4500 * 1.69% = £76.05

76.05 / 365 = 20.83p a day

21p * 9 = £1.89

There are going to be rounding differences depending on the provider.

Lokolo

Financially_Clueless wrote: »

Cool, cheers. I get that now (luckily) having read more about it. What's the difference between a cash ISA and a savings account? (Stupid question alert)

ISA means the interest is tax free.

A savings account would mean the interest is not tax free, so if you are a tax payer, you would pay tax on that £2 you made (20% for a normal rate, 40% for higher)

Financially_Clueless

Shaolin_Monkey wrote: »

I believe interest is calculated daily and compounds daily, so to calculate daily interest its roughly 1.69% divided by 365 (because its an annual rate) x the balance of the account. It's about 20-21p per day by my very rough calculation

I'm sure someone can give a more definitive calculation.

That makes sense now. It was bugging me on how it was calculated. Sounds about right now. So I'm currently getting the 1.69% and then next week when the new financial year starts I can put more into the account.

Financially_Clueless

Excellent help guys! Thanks so much. Was starting to panic as to whether I had made a mistake but seems legit.

With ISA transfers: So if i move my £4500 NOW to the Chesire BS ISA as its guaranteed 1.8% for next year. Can I then add the new allowance for the new financial year into the ISA at that rate?

Would that be a wise move as its guaranteed? With HSBC it could change right? (Prob for the worse)

Financially_Clueless

R_P_W wrote: »

a cash ISA is a savings account, the difference being you don't pay tax in the interest.

£1.93 is probably about right for that period of time. what were you expecting?

I was clueless up into now my friend. I think I was expecting 1.69% a month. (Shows how little I knew about the subject). Thanks for your response though.

penrhyn

Santander will give you 2.5% on their Direct ISA Saver.

Financially_Clueless

penrhyn wrote: »

Santander will give you 2.5% on their Direct ISA Saver.

Variable though right? Means they'll probably drop that. How likely is it to stay at 2.5% for a year?

1.8% guaranteed is pretty good considering it can't go any lower then that.

innovate

Financially_Clueless wrote: »

Variable though right? Means they'll probably drop that. How likely is it to stay at 2.5% for a year?

1.8% guaranteed is pretty good considering it can't go any lower then that.

Nobody knows where variable rates will go. Nobody knows whether Santander will keep their historic practice of keeping interest rates for a year.

But I would most certainly not settle for 1.8% guaranteed in an ISA right now if I can get a guaranteed 5% (4% after basic rate tax) for 12 months in one current account, and 3% variable (2.4% after basic rate tax) in several others.

Seems you chose your nick wisely if you think 1.8% guaranteed is pretty good. Sorry, but truth must be told.

penrhyn

If the 2.5% rate is reduced then you can switch to another provider.

Financially_Clueless

innovate wrote: »

Nobody knows where variable rates will go. Nobody knows whether Santander will keep their historic practice of keeping interest rates for a year.

But I would most certainly not settle for 1.8% guaranteed in an ISA right now if I can get a guaranteed 5% (4% after basic rate tax) for 12 months in one current account, and 3% variable (2.4% after basic rate tax) in several others.

Seems you chose your nick wisely if you think 1.8% guaranteed is pretty good. Sorry, but truth must be told.

Where are the current accounts with 5/4%? I'm just trying to figure out the best way to get something back from my money.

2.5% Santander a good offer then? Seems better then the 1.69% HSBC I currently have.

My understanding was that ISA's were a good way to do that but as my name says I am Financially Clueless so any help you can offer would be greatly appreciated.