3.3% ISA ending. £13k in it. What best to do please?

r_holmes22

Very briefly:

• All my banking/saving is currently with Santander.
• I have a joint 123 current account with my wife, into which both our salaries are paid and out of which all our bills are paid.
• We currently have roughly £13k in savings, all of which resides in their Flexible ISA (Issue 9), the 3.3% rate of which will plummet to 1.5% in less than a fortnight.
• We are currently typically able to add somewhere between £300 and £750 pcm to our savings (depending on circumstances) and hope to use it all to move home at some point over the next year or two (our house is currently on the market), so I don't want it tied up in fixed term accounts if possible.

I want to keep things as simple as possible (not opening several accounts to keep shifting money between etc) and am trying to decide what best to do.

It seems to me that my best bet would be to shift the entire £13k into the current account, where I think the 3% return would still be better, even after tax, than the 1.5% it would earn staying in Santander's ISA or the 1.7% that seems to be the best I can find elsewhere that allows transfer in of existing ISAs, online account management and penalty-free withdrawals. Does that sound right?

I would then open a Big Home Saver ISA with Newcastle BS and pay in (from the current account) the maximum £500pcm over the next year up to the annual limit.

Keeping things simple, the Newcastle BS looks the best option for maximising this year's ISA allowance but doesn't allow transfers in so what I am really asking is whether moving the £13k to the current account to earn a taxed 3% the most profitable option, bearing in mind I may need to withdraw the lot at any given time?

Thanks in advance to anybody who can spare the time to advise. My head is spinning with the scores of pages I've read on this site and forums over this weekend.

bigfreddiel

s&s isa - balanced portfolio

diy if you know how

vaguard lifestrategy fund if you dont

check passive portfolios on monevator

or

still s&s isa

build up a portfolio of blue chip high yield (3-4%) shares - fifteen or so will do make sure you cover the all the main sectors

reinvest dividends

these are both long term 10+years

let us all know what you decide to do

fj


and one other point, KISS - ignore all the financial babble you hear and read in the press

fiesta04

bearing in mind I may need to withdraw the lot at any given time?

bigfreddiel, your reply may not be the best help in this case.

F4

psychic_teabag

For money you need in the next year or two, S&S ISA sounds like a very bad idea.

Yeah, moving ISA money to 123 account sounds fine to me. Yes, you lose tax wrapper, but if you're going to spend the money soon anyway, you don't have to worry about any long-term implications.

Would you be opening a Newcastle ISA each (so 1000 pcm between you) ?

100saving

why not look at transferring it to the Santander ISA so its still TAX free but paying 1.50% on that amount? i think if you are 100% going to spend it soon then put it in the 123 account paying 3% you would get about £25.72 interest a month on 13k.

there are ISAs that pay 2.25% and the would keep the money TAX free and they pay around £24.13 a month. look at http://www.moneysavingexpert.com/savings/best-cash-isa

r_holmes22

Thank you all for taking the time to respond; I do appreciate it. Yes, basically what I am trying to ascertain is whether I'd still be better off holding £13k at 3% -tax than at a tax-free 1.7% or so.

100saving, thank you for the link. I had already read Martin's best buy page but was put off by the lack of an online option with Cheshire BS (the one offering 2.3%). I'd prefer to be able to transfer money in each month online rather than having to write/post a cheque if I can.

That said, is it possible to transfer the existing £13k into Cheshire's (doing nothing more with it until I need it) and open the 3% regular saver option with Newcastle into which I can put any 'new' savings this year?

psychic teabag; I'd never even thought of using my wife's ISA allowance as well! Rookie mistake!! That is exactly why I wanted to run this by you more seasoned campaigners first. Thank you.

So, new question. Can I open an ISA with Cheshire BS, transfer in the £13k and do nothing with it until I need it and open accounts (myself and my wife) with Newcastle BS into which we would put any spare funds (up to the annual limit) over the rest of the tax year?

Thank you all again for making the effort to respond.

cwal

Hi
As long as you transfer the funds to Cheshire and don't take them out of your Santander ISA and move them yourself and as long as you and your wife haven't made any contribututions to an ISA since the start of this tax year then both of you opening an ISA with Newcastle shouldn't be any problem at all.

psychic_teabag

r_holmes22 wrote: »

I had already read Martin's best buy page but was put off by the lack of an online option with Cheshire BS (the one offering 2.3%). I'd prefer to be able to transfer money in each month online rather than having to write/post a cheque if I can.

Are you assuming you'd have to post a cheque, or do you know that ? Online often refers to whether you can log into a site and see the account (and possibly withdraw). Even if it's a postal account, you may be given a sort code / account number which allows money to be pushed in electronically.

AndyPK

The highest interest option is to put it in their 2.5% 2 year Isa.
There are early closure charges though.

r_holmes22

cwal; unfortnately I have made deposits in the Santander ISA this tax year. Does this mean I can't deposit the remainder of this year's annual allowance elsewhere until April now?

Psychic teabag; I am assuming that I can't manage funds online. I will investigate further before deciding. Thank you for the heads up.

AndyPK; I am reluctant to deposit in fixed term account because there is a high likelihood I will need to withdraw it over the next 24 months (we are looking to move home and our house is already on the market). I suspect the early exit charges would outweigh the extra .8% gains over lower rate options.

Basically, I don't understand how much interest £13k would accrue in a 1.7% ISA vs the 3% of the 123 account minus the tax.

Thank you all again for your continued advice and suggestions, which are much appreciated.

AndyPK

The 123 interest rate is about 2.37% after tax.