isa or savings account?

natstu2005

i have a lump sum to put away about £3000 and can add anything from a few hundred upto £1000 per month to it.
i have an existing savings account that pays 3.75% gross, (3% net i think) and can add max of £500 per month to it, so will often have surplus cash.
i cant find an isa that pays better than this so not sure if to continue what im doing or put the money in an lower paying isa. however most isa's want you to put in one amount and then cant add to it.

Jaywilz

I believe you are thinking about fixed rate ISAs they do not allow you to add to them but there are many ISAs you should be able to open with £1 and constantly add to it during the year. I think you should always try and get the highest rate of interest you can so if that means sticking it in a non isa then carry on doing that. I know off my head that pretty much every bank or building society have Isas that you can add to during the year.. May be a good place to start looking at the ISAs available with who you bank with

MoneySaverLog

Ideally you'd want to build up a ISA pot, up to your allowance each year. That way it's protected from Mr Tax Man.

If you envisage paying 40% tax in the future, bearing in mind the way HM Treasury is lowering the threshold each year it becomes even more of a benefit in future in terms of tax savings.

Yes rates are low for ISA and non ISA savings at the moment, myself I'm moving to investments cause of this, but I'm finding that to be a minefield at the moment with so many different choices to choose from.

calypso_rhapsody

Take a look at regular savings accounts - they often pay higher rates for a year, though taxable. Many people save in a regular saver for a year and then move the balance into a fixed rate isa at the end of the year. More info under savings on this website!

typistretired

natstu2005 wrote: »

i have an existing savings account that pays 3.75% gross, (3% net i think) and can add max of £500 per month to it, so will often have surplus cash.
.

Where are you earning 3.75% gross?

MoneySaverLog

typistretired wrote: »

Where are you earning 3.75% gross?

There are a few current accounts that pay more than 3.75% gross, LTSB Paid 4% on balances between 5-6K which is now no longer available to new accounts and Nationwide Flex Direct currently pay 5% on up to £2,500.

My regular savers all now pay 6% I had a First Direct one mature on the 6th April at 8% The cash isa is at 3.7% but no longer available.

YorkshireBoy

typistretired wrote: »

Where are you earning 3.75% gross?

OP said they "can add max of £500 per month to it", so one would assume it's a regular saver.

natstu2005

yeh it was a reg saver with yorkshire bs i started years ago but no longer available, it pays .25% but is 3.50% continual bonus and will never be less than that.
im looking for the best interest rate, so a fixed term isa, but dont know whether im better to sacrafice the tax free side to stick with a better rate. ( i will cont the ybs account anyway but just with min payments).

innovate

use that calculator to figure out what's better.

Deduct 20% from your Reg Saver interest rate, and run it with "no tax" ticked, and "I want to dripfeed"

http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#savingscalc