Isa Vs savings account

hunnee

Hi ya,

I was hoping you guys could assist....

I have £3k of savings, I have 2 options either;

Savings account with 4% interest
or ISA 1.6% tax free.

Which is better?
It seems to me the normal savings offers a better return even after I pay tax.
Is this true?

Thank you!

PeacefulWaters

4% interest.

Then review the choices in March next year.

SG27

Or 5% with 2 tsb current accounts.

Caladan

Right now, the savings account, without question.

Before the end of the tax year, 2 scenarios:

1: You feel you will be able to max out your ISA next year -
Pay it into the ISA before the tax year ends next April.

2: You don't feel you will be able to max out your ISA next year (it's a £15k allowance so unlikely for most) -
Keep it in the savings

In the long-term though, ISAs traditionally pay some of the best interest rates and they're tax free for life, so if this is long term savings ISA will probably win out over time.

jimjames

SG27 wrote: »

Or 5% with 2 tsb current accounts.

Or Nationwide at 5% too.

Caladan wrote: »

In the long-term though, ISAs traditionally pay some of the best interest rates and they're tax free for life, so if this is long term savings ISA will probably win out over time.

If this is long term savings then cash ISAs are probably not the right thing to be using. Investments in a S&S ISA may be a better choice for money being held very long term.

Obviously you still need an emergency cash fund but money you aren't touching beyond that may be better invested.

ceredigion

hunnee wrote: »

Hi ya,

I was hoping you guys could assist....

I have £3k of savings, I have 2 options either;

Savings account with 4% interest
or ISA 1.6% tax free.

Which is better?
It seems to me the normal savings offers a better return even after I pay tax.
Is this true?

Thank you!

you have a savings account that is paying 4%. dreaming

Wise_Investor_2

I would try and avoid getting involved in fixed-term ISAs for a short while. I expect come July 1st, there's going to be some much better deals about!

Archi_Bald

Wise_Investor wrote: »

I would try and avoid getting involved in fixed-term ISAs for a short while. I expect come July 1st, there's going to be some much better deals about!

I suspect there won't be. Unless the BoE raises the base rate by then, which is very unlikely.

bigadaj

Archi_Bald wrote: »

I suspect there won't be. Unless the BoE raises the base rate by then, which is very unlikely.

It would be far more important to stop funding for lending than raising base rate.