Advice on ISA for financial dummy

missy_j78

Hi... hoping to get some advice please?

My Dad has some money in an old ISA which isn't earning any interest. He is going to lend this to me to buy a car, and I will pay him back with interest, thus helping us both out.

My question is, he wants to then open a new ISA with a slightly better interest rate, for me to make monthly repayments into. Can we do this? Can I pay monthly payments into someone else's ISA?

Also, he is retired, will this affect which ISAs he can choose from as he doesn't have the salary coming in which someone employed would?

Any help appreciated, thanks

eskbanker

https://forums.moneysavingexpert.com/discussion/3241596 discussed the issue of paying into someone else's ISA, mixed views but it's probably easiest to stage the payments via a (non-ISA) account in your dad's name.

Cash ISAs don't tend to have any restrictions on salary/income as they're exclusively savings products.

bigadaj

Cash isa rates are very poor, it's generally better for people to save in current accounts where you can get 5%, and over 3% for large amounts, which is better even after tax than pretty much any cash isa.

There are numerous threads on this board detailing the optins of you do search.

Your_Hero

bigadaj wrote: »

Cash isa rates are very poor, it's generally better for people to save in current accounts where you can get 5%, and over 3% for large amounts, which is better even after tax than pretty much any cash isa.

There are numerous threads on this board detailing the optins of you do search.

bigadaj is right here about the better interest rates in c/a and other savings accounts. In the current climate, cash ISAs do seem pretty poor value for money, particularly regular saving ones.


However, ISAs from a tax perspective are very good and allow you to build up tax-free money which is incredibly valuable.


In this case however you are probably better off using the high interest current accounts (such as Lloyds TSB's Vantage account) to repay your father. Once the money builds up to a sizeable amount, he could then siphon the money back into an ISA as single lump sum payment when he finds a better rate.

jimjames

Your_Hero wrote: »

However, ISAs from a tax perspective are very good and allow you to build up tax-free money which is incredibly valuable.

They are only good and valuable IF you have more than the annual £15k allowance. If you have under that then there is no point using a cash ISA until rates improve to be better than you can get outside an ISA as you can dump the whole amount into an ISA whenever you want.

All the time you have under £15k in savings (as 70% of the population do) then you are better off getting the best possible rate on your savings which is currently 5% from a current account NOT from an ISA.