Overdraw or take out of ISA?

WaxiesDargle

Hi

With £8000 in an instant access Halifax ISA (1.55% interest gross) and £3700 to add over the next few months, I've had extra items to pay for this month and will go overdrawn (planned overdraft) by about £200 which is an unusual blip. The fees are £1 a day and this will be for about 7 days.

Would you simply withdraw from the ISA and pay into the current account before the money becomes overdrawn or leave it in the ISA and take the £7 hit?

I know it isn't a great deal of money but would just like your views

Cheers

jimjames

Yes, id take it out of ISA.

You can easily get that back into an ISA but you'll get much better rates outside.

If its money you need to spend then keeping it accessible makes more sense anyway.

noh

If it is a reward current account you will also not receive the £5 reward the following month if you went overdrawn.
I would transfer the £200 from the ISA to the current account.

CLAPTON

no brainer, withdraw from the ISA and avoid going overdrawn

lost ISA interest = 200 x 1.55% x 7/385 = £0.05
plus maintaining your pristine credit record

justme111

I would go overdrawn.in fact I often do. It is a loss in money terms immediately but knowing myself and dare I say many people are similar - once I take money from savings /fund earmarked for savings I am far less likely to put it back in so long term I will have less in savings if I fiddle with them to avoid charges. Having said that circumstances are different , I keep my isa in fixed term while you have it instant access , I presume that's the point of instant access - to be able to access money when needed. So if you don't you will end up penalised twice , once with lower rate that you earn because you wanted it instant access and second time with overdraft charges

CLAPTON

justme111 wrote: »

I would go overdrawn.in fact I often do. It is a loss in money terms immediately but knowing myself and dare I say many people are similar - once I take money from savings /fund earmarked for savings I am far less likely to put it back in so long term I will have less in savings if I fiddle with them to avoid charges. Having said that circumstances are different , I keep my isa in fixed term while you have it instant access , I presume that's the point of instant access - to be able to access money when needed. So if you don't you will end up penalised twice , once with lower rate that you earn because you wanted it instant access and second time with overdraft charges

maybe consider have most of your money in fixed term ISAs and some forming a decent float in instant access ISA or interest paying bank a/c (ie. those paying 3-5%)

this will maximise interest earned, zeroise OD fees and maintain a pristine credit record (i.e. one without regular OD useage showing)

jimjames

justme111 wrote: »

I would go overdrawn.in fact I often do.

Slightly off topic but if you are often going overdrawn you probably need to review your spending.

If it is the same amount every month then using savings to clear it will mean you don't overdraw. If it then build up again then you are spending more than you are saving.

With the current ISA rates so poor it makes no sense at all in MSE terms to run a savings balance when you are also running an overdraft you are paying for. Obviously different if it is a 0%, I use the £100 free one but make sure to never exceed it.

YorkshireBoy

WaxiesDargle wrote: »

...but would just like your views

A credit card helps smooth life's ups and downs!

Mirno

Do you completely use your ISA limit (remember this year it'll effectively be 15k)? If not use the ISA, you can put the money back. If you do, then weigh the benefit of immediate cash vs. the loss of tax on £200 for however long you're likely to keep cash in the ISA.

Mirno

justme111

jimjames wrote: »

Slightly off topic but if you are often going overdrawn you probably need to review your spending.

If it is the same amount every month then using savings to clear it will mean you don't overdraw. If it then build up again then you are spending more than you are saving.

With the current ISA rates so poor it makes no sense at all in MSE terms to run a savings balance when you are also running an overdraft you are paying for. Obviously different if it is a 0%, I use the £100 free one but make sure to never exceed it.

No it is different amount , my income and expenses fluctuate , usually it happens because I could not be bothered to move money between accounts in time . Sometime because I had expensive month or year . I may have direct debits for regular saver accounts on one hand and go into overdraft on another. I would rather be more ambitious with my savings plans then avoid charges if a few pounds here and there.

WaxiesDargle

Thank you for all your replies, they are very much appreciated....and I didn't think about losing the £5 reward

Money transferring as I type.

Cheers