Some ISA Questions

no1wf

Excuse me if these are silly questions, I've read all the articles but some things still don't make sense.

I'm looking for a cash only ISA and have found one with 3% fixed interest which seems good to me, can all be done online which would be best for me. But it says it's a 5 year account, what does this mean? I can't leave within 5 years, what happens after 5 years, is it anything serious?

How do you put money into an ISA account online, do you just type in the bank account the money is coming from and it moves over, or something else?

What are ISA transfers? I see that some places don't allow them. Is this just transferring money from one ISA into another?

When it is time for your interest to be added, is it calculated using the current amount you have in the account? Example, you add an extra £500 a week or so before your interest is due, will that affect the amount of interest you get?

Thanks in advance!

DragonQ

You need to read the terms and conditions before signing up to the account.

By the sounds of it, it's fixed for 5 years which means your interest rate is guaranteed but you can't withdraw the money within that time (at least without suffering an interest penalty).

You can deposit money into an ISA in several ways, depending on what the ISA provider allows. The easiest is probably online (Faster Payments).

ISA transfers are indeed transferring money from one ISA to another. This does not contribute to your annual ISA subscription limit as long as you do it using official ISA transfer forms.

Interest is always calculated daily and usually added annually. Do you seriously think a bank would give you a year's worth of interest on £500 if it's only in the account for a week?

no1wf

DragonQ wrote: »

You need to read the terms and conditions before signing up to the account.

By the sounds of it, it's fixed for 5 years which means your interest rate is guaranteed but you can't withdraw the money within that time (at least without suffering an interest penalty).

You can deposit money into an ISA in several ways, depending on what the ISA provider allows. The easiest is probably online (Faster Payments).

ISA transfers are indeed transferring money from one ISA to another. This does not contribute to your annual ISA subscription limit as long as you do it using official ISA transfer forms.

Interest is always calculated daily and usually added annually. Do you seriously think a bank would give you a year's worth of interest on £500 if it's only in the account for a week?

I don't know that's why I'm asking, it makes sense when you say it like that though lol I've only ever had one bank account so this is new to me sorry.

Reading the product info on this account it says the fixed rate is until 24th May 2018 and then it becomes variable. It also says I must make my deposit within 30 days (which I plan to).

It also says subscriptions are not allowed to any other cash ISAs, does this mean you're only allowed one ISA at a time?

innovate

no1wf wrote: »

Reading the product info on this account it says the fixed rate is until 24th May 2018 and then it becomes variable. It also says I must make my deposit within 30 days (which I plan to).

It means all your deposit for 2013/14 (max £5,760) must be made within 30 days. If you do not deposit all of it by then, you have lost the remainder of this year's allowance.

no1wf wrote: »

It also says subscriptions are not allowed to any other cash ISAs, does this mean you're only allowed one ISA at a time?

yes, one per financial year

I feel you should really spend a lot more time reading up about ISAs, may be starting with the article on the main site: http://www.moneysavingexpert.com/savings/best-cash-isa#whatis

no1wf

innovate wrote: »

It means all your deposit for 2013/14 (max £5,760) must be made within 30 days. If you do not deposit all of it by then, you have lost the remainder of this year's allowance.

yes, one per financial year

I feel you should really spend a lot more time reading up about ISAs, may be starting with the article on the main site: http://www.moneysavingexpert.com/savings/best-cash-isa#whatis

I did read a lot of the articles but still ended up with questions somehow.

Ah so it means I can only make one deposit the entire year? Is this the same with all accounts or just this one?

innovate

no1wf wrote: »

I did read a lot of the articles but still ended up with questions somehow.

Ah so it means I can only make one deposit the entire year? Is this the same with all accounts or just this one?

Forgive me, but you can't have done a lot of reading if you have questions like these.

It is usual that fixed-term accounts allow only one deposit, or a number of deposits within a very short period (e.g. 30 days, or no later than a given date, which will be in the very near future) after account opening.

It is also usual that you will not be able to withdraw a penny from a fixed-term account until it has matured.

If you want flexibility on deposits and withdrawals, you must choose an instant access account, or one with short notice periods. Though you don't really want to use an ISA if you have plans for withdrawals in the short to medium term.

It's a bit unclear to me why have decided you are looking for an ISA, and a 5-year fixed term one at that.
Perhaps you would do better if you drew up a requirements list and then chose an applicable account. This may or may not be an ISA.

Your requirements list should include:

• how much do you plan/hope to deposit when
• how much do you plan to withdraw when
• what the max time is you can lock your money away for. Can you e.g. lock some money away for longer but need access to some more easily

Your requirements list needs to be thought through in some detail. Locking any money away for 5 years is quite a serious commitment, and you wouldn't do it easily for 3% AER when you can get the same AER on 2-year commitments.

no1wf

innovate wrote: »

Forgive me, but you can't have done a lot of reading if you have questions like these.

It is usual that fixed-term accounts allow only one deposit, or a number of deposits within a very short period (e.g. 30 days, or no later than a given date, which will be in the very near future) after account opening.

It is also usual that you will not be able to withdraw a penny from a fixed-term account until it has matured.

If you want flexibility on deposits and withdrawals, you must choose an instant access account, or one with short notice periods. Though you don't really want to use an ISA if you have plans for withdrawals in the short to medium term.

It's a bit unclear to me why have decided you are looking for an ISA, and a 5-year fixed term one at that.
Perhaps you would do better if you drew up a requirements list and then chose an applicable account. This may or may not be an ISA.

Your requirements list should include:

• how much do you plan/hope to deposit when
• how much do you plan to withdraw when
• what the max time is you can lock your money away for. Can you e.g. lock some money away for longer but need access to some more easily

Your requirements list needs to be thought through in some detail. Locking any money away for 5 years is quite a serious commitment, and you wouldn't do it easily for 3% AER when you can get the same AER on 2-year commitments.

I've read about people putting in however much they want each month, and now I'm finding out there's some where your deposit amount is the only amount you can put in. I don't remember reading that in any of the articles.

AER is the percentage of interest, is that right? I don't know a lot at all about these things like I've said, I've only ever had one bank account and I didn't pick it because of interest rates or anything, I've never had to think of things like this before.

I have my main Natwest bank account that my wages go into, and an e-savings account that I transfer my savings to (and can transfer some back if needed, very quick and easy all on the same page). I want to save to buy a house and although my OH can save he's pretty terrible at it but I'm quite good so would like to make the most of what I do save.

My plan was to take the chunk of savings I have now (3k) and put them in an ISA. I can save at least £200 a month so would need one I can put into monthly but not a regular amount/direct debit type thing. I'm only part-time at the moment but doing as much overtime as I can, and have 3 months guaranteed overtime at the end of the year. Anything I can save I was going to split between the ISA and my e-savings so I wouldn't need to withdraw from the ISA. I don't plan on withdrawing from the ISA until we needed it for a house deposit so I figured locking it away for a few years (more than 1 but I suppose less than 5) would be okay since I would have my e-savings to fall back on in emergencies.

innovate

OK, here's a suggestion. Check it out thoroughly to see whether it fits your needs

1. an ISA doesn't seem your best choice right now - you can make more money elsewhere. Instead of putting your money into an ISA straight away, save up in a better interest-paying account for another year or so. You can then still put some money into an ISA if that is the best place in a year's time
   .
2. look at opening a Nationwide FlexDirect. It's a straight-forward current account that pays you 5% AER for 12 months on up to £2,500. After basic rate tax, that is 4% AER - way more than you would get in an ISA. You will have to move your money elsewhere after a year, but that's not hard to do - - and you have to move your money once a year in most accounts if you want to get the best rates.
   
   You do NOT have to close your Natwest current account - - just leave it as is. Threat the Nationwide FD one as a savings account. In fact, it will come in quite handy, because once a month, you need to deposit £1K into your Nationwide FD account. You can do that by faster payment from your Natwest, £1K into Nationwide, and immediately back to Natwest. Or start from Nationwide, £1K into Natwest, and then immediately back into Nationwide
   .
3. for the remaining money, look at a Regular Saver, such as the First Direct one at 6% AER. Though if you want to vary your monthly deposits, you might do better in another Reg Saver. The first few posts in this thread have the best Regular Savers: https://forums.moneysavingexpert.com/discussion/comment/6932895#Comment_6932895
   .
4. you could also consider moving your Natwest account to somewhere that pays you interest and/or cashback, such as Santander 123 or Lloyds Vantage. Natwest is generally not a good place for interest
   .
5. there are Quidco cashback offers for the Nationwide FlexDirect and the Santander 123. Though never take any Quidco money for granted until you have been paid. You can also make money from opening a First Direct Current Account

The MSE boards have loads more detail on all I listed above - - I can only recommend again you do loads more reading before you commit yourself to anything.

no1wf

I was trying to avoid opening another bank account as I figured it was something that goes against you on your credit report and stuff when going for a mortgage. I thought of an ISA because it discourages you to withdraw from it.

I'd rather not change my Natwest as my main account, it's connected to a lot of things and I'd rather avoid the hassle and stuff obviously but I'll definitely look at your links and elsewhere for a better interest account to put my savings in if I can be sure it doesn't affect my rating or anything

innovate

If you apply for a couple of new current accounts now, nobody will blink an eyelid in a year or two when you apply for a mortgage.

If you manage several current accounts well (with no debts etc markers), that will tell lenders that you can manage credit and it will work to your advantage.

If you want to be discouraged from withdrawing - Regular Savers do the same, and you can have more than one.

If you don't like the thought of moving from a current account that pays you no interest to one that pays you interest (and may be cashback) - fair enough. Getting the best interest rates and deals isn't for everybody, and you need to be comfortable with what you do.

no1wf

innovate wrote: »

If you apply for a couple of new current accounts now, nobody will blink an eyelid in a year or two when you apply for a mortgage.

If you manage several current accounts well (with no debts etc markers), that will tell lenders that you can manage credit and it will work to your advantage.

If you want to be discouraged from withdrawing - Regular Savers do the same, and you can have more than one.

If you don't like the thought of moving from a current account that pays you no interest to one that pays you interest (and may be cashback) - fair enough. Getting the best interest rates and deals isn't for everybody, and you need to be comfortable with what you do.

That's true I didn't think of it like that, it's going to be at least a year before we have anything close to what we need so like you said lenders might not be bothered by that time.

I don't know if there's anything going on with interest rates at the moment or if they've always been like this lol I've seen a couple good ones already but you can only deposit money with a standing order and that's not what I'm after. Everything else I'm seeing is like below 3% is that good do you think, is that the average out there today?