Santander123 or ISA

Wikikenkey

I have been too-ing and fro-ing with opening a Santander123 account to put the ISA funds into? Is it best to leave a litte in the ISA and put the majority into the 123 account?

I have banked with NatWest (Advantage Gold current account) for about 24 years and am reluctant to give this current account up yet.

How does the Santander account work? Would I have to give up the NatWest account? I have mobile phone insurance and I have an overdraft facility of £1000 in use and I would prefer that most of my direct debits of which there are many and on varying dates, continue through NatWest. Would this be possible? I believe I need to set up at least 2 direct debits to go through Santander which I can do. I intend using my salary into my NatWest account to fund the monthly £500 into the 123 and then withdraw later. If this helps, I am a higher tax rate payer.

Basically, can I run both accounts together without having to close NatWest and also will I lose any money by moving the ISAs to 123?

As an aside, what does one lose if they close down an ISA? Is it the interest for the year gone?

Sorry so many questions. Thanks for your help.

AndyPK

YeAh keep two current accounts going.
Once you have a 123 you can transfer your existing Isa to them at 2.3%.

Top your Isa up in march.

AndyPK

You get cash back on household bills thru the 123 so I would transfer the qualifying ones over to get some more £ and to cover the £2 monthly fee.

Archi_Bald

Wikikenkey wrote: »

As an aside, what does one lose if they close down an ISA? Is it the interest for the year gone?

One loses the tax-free status of the money for good. Which, particularly for a higher rate tax payer, sounds quite a bad deal.

For example, a Santander 123 at 3% AER, and £24 annual fee, pays you £336 net interest if you keep £20K in there for a whole year. That is effectively 1.68% AER.

A Nationwide Flexclusive ISA at 2.25% AER pays you £500 for the sam £20K for a year. Unfortunately, this ISA doesn't allow transfers in. But there are "transfer-in" ISAs about that will pay you as much as the 123 would pay, and protect the tax-free status of your money. Check out post 1 in this thread for options: https://forums.moneysavingexpert.com/discussion/401374