Tell us you cash ISA questions

Coops64

Because of the FSCS limit does this mean that the maximum you can safely save in a cash ISA is £85,000?

greenglide

The amount covered by the FSCS guarantee is £85,000 over all money for a single institution (bank, building society etc).

£85,000 is generally is large amount in cash savings unless you are saving for a genuine reason (house deposit etc). It is still subject to inflation risk and shortfall risk, its isnt "risk free".

dadsarmy1

Hi, what if anything happens if a new cash ISA is withdrawn for new deposits after I make a deposit but before a cheque can can be posted and be received by the bank? If I only manage to put a small deposit say £50 and the ISA is pulled will I be unable to use the other amount in a tax free account say £19,950 elsewhere? Thank you for any guidance.

eskbanker

dadsarmy1 wrote: »

Hi, what if anything happens if a new cash ISA is withrawn for new deposits after I make a deposit but before a cheque can can be posted and be received by the bank?

I don't really understand the question (a deposit only happens once a cheque is received and paid in) but you'd need to check cutoff arrangements with the relevant provider.

dadsarmy1 wrote: »

If I only manage to put a small deposit say £50 and the ISA is pulled will I be unable to use the other amount in a tax free account say £19,950 elsewhere?

Your options will certainly be constrained - you couldn't pay into another cash ISA during the same tax year while keeping the first one open but could open a S&S one or pay into a taxable account that earns more interest than a cash ISA. Since the introduction of the personal savings allowance negated the tax differential for most people, it's even easier than before to beat the pathetic returns from cash ISAs by using non-ISA accounts....

MathsTutor

I wanted to ask: why don't you use APRs for your ISA details? - (as they are easier to understand and calculate). I would have thought APRs more also appropriate for the FIXED ISAs - as the rate doesn't change (?!)

eskbanker

MathsTutor wrote: »

I wanted to ask: why don't you use APRs for your ISA details? - (as they are easier to understand and calculate). I would have thought APRs more also appropriate for the FIXED ISAs - as the rate doesn't change (?!)

AER is the recognised comparative measure for savings accounts, in the same way that APR is used to compare debts, as explained in more detail at https://www.moneysavingexpert.com/banking/interest-rates/

masonic

MathsTutor wrote: »

I wanted to ask: why don't you use APRs for your ISA details? - (as they are easier to understand and calculate). I would have thought APRs more also appropriate for the FIXED ISAs - as the rate doesn't change (?!)

APR in savings terms is equivalent to the gross rate (the return without taking into account compound interest), so two products paying the same APR, one with monthly interest and one with annual interest, would not deliver the same return. Two products with the same AER will deliver the same amount of interest on a fixed balance regardless of interest payment frequency. So AER is the correct rate to use when comparing a range of different accounts. The account with the highest AER will give rise to the highest return on a fixed balance over a year, while the same is not necessarily true of APR.

APR does include the effect of charges though, while AER (or EAR in the case of debts) does not. This is typically not relevant to savings products which are usually free to open and hold.

Chislimol

I have a cash isa that I pay into for a rainy day. I’m looking to open a Help to Buy ISA.
When I open a help to buy ISA does this mean I have to stop paying into my cash ‘rainy day” ISA?

Thanks

masonic

Chislimol wrote: »

I have a cash isa that I pay into for a rainy day. I’m looking to open a Help to Buy ISA.
When I open a help to buy ISA does this mean I have to stop paying into my cash ‘rainy day” ISA?

Thanks

If you have contributed to the rainy day ISA in this tax year you would need to wait until the next before contributing to the HTB ISA. In any case you would need to stop paying into the rainy day ISA.

Edit: I should add that there are workarounds involving ISA transfers and/or flexible withdrawals to avoid the wait.

Alexland

Yes and one of the workarounds is to have both the Cash ISA and HTB ISA with the same provider if they offer a Split Cash ISA wrapper (e.g. Nationwide). As such if you ISA transfered your existing Cash ISA to such a provider you could then open and contribute into their HTB ISA.

Another option, if you are under 40 and looking to buy in over 12 months time with the 25% bonus, would be to open a Lifetime ISA (e.g. Skipton) which you are allowed to contribute into alongside a Cash ISA.

Alex