ISA or fixed rate bond?

ColdIron

How much money is involved in this secondary amount?
Bear in mind that your ISA allowance this tax year is £5,760 leaving you only £3,010 for additional funds

SJP21

The two combined amounts would be 5451 so it would be within my allowance for this year. Do you think this would be the sensible option?

ColdIron

I had assumed that the 2.1% ISA was a variable rate non-fix but you introduce the possibility that it's a 2 year fix. What ISA is it?

SJP21

Hi
Sorry I've been off doing some gardening. It is a Halifax online fixed rate isa 2.1%.

ColdIron

It's a shame it's fixed as come March/April there are likely to be better deals around. By far the easiest option is to bung it all in the Halifax, 2.1% isn't a bad rate right now and you have the certainty of it not being less for 2 years

Another option to maximise your return might be to split it across a couple of higher interest rate current accounts until March or April and then see what is on offer. This would take more effort but would probably be worth it. For instance put £2,500 into a Nationwide FlexDirect at 5% (4% after tax) and £2,951 in a Lloyds Vantage or TSB Enhance at 3% (2.4% after tax). These are better rates than the 2.1% ISA and since they are easy access you could reconsider in 6 months. You might even decide not to put it into an ISA at all

There are some conditions attached to these accounts, mainly that you have to fund them with £1,000 a month but you can easily do this by transferring the money between the accounts once a month, it only has to stay there for a moment

Just an option for you to think about, it's not my intention to confuse. The Nationwide account would give you access to their 'Flexclusive' offers for existing customers and sometimes have attractive ISAs come the new tax year