ISA's v Savings Accounts

Albertchall

Both my wife and I are retired and I am receiving a works pension and we both have ISA's. I am looking at ways to increase our monthly income and am wondering if it would be better to move our ISa savings into a savings account that pays the interest monthly into our current account. We are not interested in increasing our savings pot just to maximise our monthly income.

Anyone got any opinions or advise?

CLAPTON

best to save money with the best interest rate net of tax; so it depends upon what your ISA pays and what the alternative is (after tax)

assuming your ISA is instant access, then there is nothing stopping you withdraw the monthly interest equivalent if you wish.

grizzly1911

Albertchall wrote: »

Both my wife and I are retired and I am receiving a works pension and we both have ISA's. I am looking at ways to increase our monthly income and am wondering if it would be better to move our ISa savings into a savings account that pays the interest monthly into our current account. We are not interested in increasing our savings pot just to maximise our monthly income.

Anyone got any opinions or advise?

If you have a works pension are you liable to pay income tax?

Is your wife able to make use of any unused personal tax allowances?

It may be possible to use these, by placing the money in her name, and ensure she gets the interest paid gross. The ISA wrapper becoming superfluous.

Marazan

I think there may be misunderstanding about how interest on a bank account is calculated underlying this question.

The interest on your account is calculated daily regardless of if it is paid monthly or yearly.

So if you had an account with £1000 pounds in it, and 6 months into the year you withdrew £500 pounds by the time 12 months had elapsed you would receive exactly the same interest if it was paid monthly or yearly (Barring any account specific penalties for making withdrawals).

So as CALPTON says you can just setup monthly withdrawls of the equivalent monthly interest payments.

Eco_Miser

It's best to maximize your annual interest, possibly drawing your monthly income from capital set aside for the purpose in a separate account . Martin explains it here, at the section headed "Do you live off savings interest?" well down the page.

Currently, the best rates for instant access are current accounts paying btween 3% and 5% gross AER.