ISA v Santander 123

PantsMAN

We currently have money in 2 Santander cash ISAs which are coming to the end of the period of 'useful' interest.

My question is - Is it advisable to now open a Santander 123 account, transfer my business from my current bank and place the money from the cash ISAs into this account knowing I can get 3% interest on any balance ( The ISA money would be ring-fenced within the account)?

I feel this is the only way I am going to get a half-decent interest rate even compared with other Cash ISAs.

bigadaj

Possibly.

You'd lose the tax wrapper from previous years, but after tax you'd be earning 2.4% in a 123 account, though there is a £2 monthly fee with cashback on direct debits which for me cancel each other out.

Many people are considering this, others are converting the cash isas into shares isas fro potential increased return, though doing that obviously places the money at higher risk with potentially higher returns.

VT82

If you take the money out of your ISAs, you won't be able to put it back into an ISA, except using your normal annual ISA allowances.

You say that it would be 'ring-fenced', just as long as you mean 'ring-fenced from being spent' and understand that Santander won't ring-fence it for you, and still treat it as an ISA balance!

People may say 'don't take it out of an ISA - otherwise it will lose its tax free status forever!', but if you wouldn't be making use of your ISA allowances anyway, it might be the best option to have it in the 123 account for now. There is a guide specifically on this subject in the weekly email this week with more info.