Cash ISA and Santandar 123

middlep

I'm in the process of switching my current account to the Santandar 123 account.

I have a Cash ISA with Virgin Money with £5k-ish in it that pays 2.4% gross.

Do you think I should keep my ISA where it is or do you think I should transfer that money to my new 123 account that would pay 3%? I know there's tax benefits of the ISA, but not sure if that outways the smaller interest rate?

G_M

the 123 rate is 3% which = 2.4% net for a basic rate tax payer (1.8% for higher rate tax payer).

Your ISA pays 2.4% tax free.

On top of that, once you remove it from the ISA, it can never be returned.

middlep

Great... thanks for the quick and clear response... will keep the ISA then!

McKneff

I wouldn't trust Santander with a £5 note......

ColdIron

SPnomore wrote: »

Also, don't forget you only get 3% on balances over £3k in the 123. You get nothing on the first thousand.

If your balance is over £3,000 you receive interest on the entire balance

ColdIron

SPnomore wrote: »

oh great! - thanks for correcting me. I am currently opening one too.

I read the following and obviously misunderstood, thinking it meant "the balance from £3000" rather than "if the balance is over".

"3% AER/2.96% gross (variable) on balances from £3,000 and up to a maximum of £20,000"

It is a little ambiguous but if you keep reading it says

• 1% AER/gross (variable) on balances from £1,000.
• 2% AER/1.98% gross (variable) on balances from £2,000.
• 3% AER/2.96% gross (variable) on balances from £3,000 and up to a maximum of £20,000.

Interest rates will apply on the first £20,000 of your entire balance once you have at least £1,000 in your account.