ISA vs. existing 3% savings account

ade1982

Just having a think now.

On April 6th 2013, I put my existing ISA into a 2 year fixed ISA (and transferred my allowance in for 2013/14 at the same time) I cannot pay 2014/15 into that account (one of the terms, it was Santander Major ISA I think)

I have a wedge of money (c. 30k) in my Santander First Home Saver account (not available to new customers), which currently pays 3%. By my calculation, this means I earn 2.4% after basic tax.

Aside from the very fiddly Coventry account, there isn't much about for ISAs that beats 2.4% at the moment, so sense to me says leave it in the FHS account.

However, what I can't quite get my head around, is when the ISA rates pick up, I will have c.£6k less in there to accrue interest.

What's the best option?

Deneb

I'd keep the money in the FHS account for now, and transfer the annual allowance into an ISA at the end of the 2014-15 tax year, with the option to put it in an ISA sooner if rates improve to your advantage.