Advice on ISA/savings account

HScorpio1985

Hi,

After shopping round a bit I have narrowed my savings options, I think, and I was looking for some final advice for closure.

Info:
Currently, I have around a £3000 lump sum that I want to save. I will then have at least £750 a month to save from now on. The plan is to save as much as possible until around Christmas 2015 before heading to Australia/New Zealand. The money would then be moved into a savings bond and left to gain interest while I was out there until I came back after a couple of years. I am really just looking for the best interest rate with the least amount of hassle really.

I have talked myself out of an ISA because any interest rates I have found with most of the bigger banks are so low currently AND because I would have to withdraw the money from my ISA and move it to something else before I leave the country as I would not be eligible for the tax free savings. I know rates are higher with building societies etc but I am looking for relatively hassle free i.e. able to transfer money over the internet and having a branch close by.

What I have decided on:
Open up a savings account with Barclays (my current account and credit card are currently with Barclays). This is a direct debit of max £250 a month with 3.25% interest. Open up a Santander 123 current account and deposit the £3000 and then pay in the £500 a month by direct debit from my Barclays current account and whatever is left over at the end of the month. Set up the 2 direct debits (Probably phone and gym) and keep everything else with my Barclays account as I have no problem with it.

Questions:
Do people think this is the best way forward for me? Best rates with the least amount of hassle?
I am right in saying that if I left the country I would be ineligible for a tax free interest ISA? So I wouldn't be able to leave my money to gain interest while I am away and I would have to move it?

Archi_Bald

HScorpio1985 wrote: »

I am right in saying that if I left the country I would be ineligible for a tax free interest ISA? So I wouldn't be able to leave my money to gain interest while I am away and I would have to move it?

You can leave what you have in an ISA, you just cannot add anything to it whilst living abroad. You will continue getting interest whilst abroad, but the amount of interest is likely to be minute since most ISA rates drop after the first 12 or so months.

Can't comment much about your plan - you need to decide what's right for you. Just to say the interest rates are variable, and new offers are likely to become available, so you need to keep an eye on things.

HScorpio1985

Archi_Bald wrote: »

You can leave what you have in an ISA, you just cannot add anything to it whilst living abroad. You will continue getting interest whilst abroad, but the amount of interest is likely to be minute since most ISA rates drop after the first 12 or so months.

Ok. I thought that as I wouldn't be paying any tax in the country then I wouldn't be eligible for the tax free interest savings. You are right though that if I left it in an ISA the interest would steadily decline so i would be better off putting it into a savings bond?

Archi_Bald wrote: »

Can't comment much about your plan - you need to decide what's right for you. Just to say the interest rates are variable, and new offers are likely to become available, so you need to keep an eye on things.

Yes as it's only a two and a half year plan I just wanted to get the best rates hassle free. And these are what I thought were currently. Thanks again.