Tell us you cash ISA questions

Former_MSE_Sally

Hi folks,

We've just updated our Cash ISA guide to include FAQs at the end. We'd love to know if we've missed anything so if you've got an ISA question we've not already answered, post it below and we'll try to help.

Thank you

MSE Sally

Lyyynda

Hi, I have a web cash ISA with Nationwide which at the moment is on a goodish rate of interest, this rate will end in August to a much lower rate. I would like to know if I can put in my present allowance now at the good rate and in August when the new NISA comes in and Nationwide hopefully have better rate NISA account, can I then transfer all the old ISA into that account even if I have put money into it already this tax year, especially as the allowance will go up in July? Or can I take the existing web ISA and transfer it to another provider along with the remainder of my ISA allowance.

innovate

Answer to first Q should contain a red hot warning that people need to ensure they are not going over £85K with the same financial institution, across all their deposits.

somerset_fox

I've been with the Britannia Building Society for years and have a cash ISA with them. Now they have merged/ morphed into the Co-Op Bank, and the Co-op bank seems to be in trouble, should I withdraw my savings and look for a (potentially) more stable bank, or ride out the storm and stick with Co-Op. Wouldn't want to find my life savings gone if the bank goes belly up.

Archi_Bald

It's a good start, MSE, by way to go before you can be proud of this FAQ.

The conclusions of the question whether cash or S&S ISA is incredibly misleading

In short, small investors who won’t use their capital gains and are putting cash in shares investments will gain more using their cash ISAs to the limit, then putting the rest in shares. Big investors, especially those putting money in bonds, should max out their stocks & shares ISAs.

It is not a question of big vs small. It is in the first instance a question of the purpose of the money, and for how long a person wants to put it away. Another fundamental is that investments have historically outperformed cash, and that it isn't just about tax savings.

There is nothing wrong if you don't have a grasp on such fundamentals but it is rather shocking if you then want to comment on the matter, MSE.

A further issue IMO is that MSE do not talk about SIPPs as an alternative to both, cash and S&S ISAs.

Next, on the question: "Can I set up a monthly standing order into my ISA?"
The answer given is obviously not true for all FRISAs, though Lloyds and TSB currently are the exception to that. The question of FRISAs vs instant access vs notice ISAs should be addressed separately.

Next, this answer:

Interest is calculated daily so what you're actually paid is based on how much you've had in the account when it's payable.

Probably well meant but totally incorrect. What you are actually paid is not dependent on how much you have had in the account when it's payable but on how much you had in the account on each day when the daily calculation took place.

Archi_Bald

It's a good start, MSE, by way to go before you can be proud of this FAQ.

The conclusions of the question whether cash or S&S ISA is incredibly misleading

[/quote]In short, small investors who won’t use their capital gains and are putting cash in shares investments will gain more using their cash ISAs to the limit, then putting the rest in shares. Big investors, especially those putting money in bonds, should max out their stocks & shares ISAs.[/quote]

It is not a question of big vs small. It is in the first instance a question of the purpose of the money, and for how long a person wants to put it away. Another fundamental is that investments have historically outperformed cash, and that it isn't just about tax savings.

There is nothing wrong if you don't have a grasp on such fundamentals but it is rather shocking if you then want to comment on the matter, MSE.

A further issue IMO is that MSE do not talk about SIPPs as an alternative to both, cash and S&S ISAs.

Next, on the question: "Can I set up a monthly standing order into my ISA?"
The answer given is obviously not true for all FRISAs, though Lloyds and TSB currently are the exception to that. The question of FRISAs vs instant access vs notice ISAs should be addressed separately.

Next, this answer:

Interest is calculated daily so what you're actually paid is based on how much you've had in the account when it's payable.

Probably well meant but totally incorrect. What you are actually paid is not dependent on how much you have had in the account when it's payable but on how much you had in the account on each day when the daily calculation took place.

NB. Your ISA transfer guide needs updating to say that from July 1, transfers from S&S to cash is possible. It also needs updating to cover S&S transfers in general. Although you could opt to say that you don't know how S&S transfers work and therefore you only focus on cash ISAs.

jimjames

The first question should be "do I need an isa/is an isa right for me"

All the way through the article there is the assumption and statement that an isa is always the best option and the use it or lose it mentality. That's fine if you have £15k of savings but when the average is under £2000 it isn't good advice.

You should get the best rate for your money regardless of whether that is taxed or in an isa. No rush at all to get that money into an isa by march 2015 as your article claims.

jimjames

The ISA page is still not giving the best advice. How about having a flow chart for readers to work out if an ISA is worthwhile for them?

For someone with small amount of savings in a 5% current account there is absolutely no need to move the money in March 2015 to an ISA if the rate is still better outside.

Giving FAQs that help people to get the best return is my understanding of what MSE should be about.

http://www.moneysavingexpert.com/savings/best-cash-isa

You also need to look at the bigger, long-term picture. Saving in an ISA guarantees tax-free status on that cash for as long as it's kept in an ISA. Interest on a current account is likely to be short-lived. Though in an ideal world, you'd have both. Try this:
First, put cash in a high-interest bank account. As long as the after-tax rate beats your chosen ISA, do this now rather than using your ISA allowance. See Current Accounts for the full options.
Then, use the cash to open an ISA in March 2015. A week before the tax year ends, move the cash out of the bank account to fill your ISA allowance. That way you get the short-term high rate from the banks, but you still get the tax-free benefit of your ISA allowance. See Martin's ISAs vs high-rate bank accounts blog for full details.

jt3_2

Is it legal to transfer an existing cash isa into a new account paying a better rate for the current tax year 1.8%. Then set up a new account paying a 3% on £15k with no transfers in?
The main purpose (aside from rates) is to prevent exceeding £85k Guarantee.

saintalan

jt3 wrote: »

Is it legal to transfer an existing cash isa into a new account paying a better rate for the current tax year 1.8%. Then set up a new account paying a 3% on £15k with no transfers in?
The main purpose (aside from rates) is to prevent exceeding £85k Guarantee.

Yes provided by existing you mean nothing paid in 2014/15 yet.

...and yes to the 3% for 15k, please tell us all with whom. Don't forget you can only pay in £5940 before 1 July.

Alan

innovate

saintalan wrote: »

...and yes to the 3% for 15k, please tell us all with whom. Don't forget you can only pay in £5940 before 1 July.

Well, you can get a 3% ISA with transfers in. Just takes a teeny weeny little bit of research to find it amongst the very few posts on the MSE ISA board.