£9K - put in NISA or Santander 123 acct?

waterwatereverywhere

Hi,

A relative has an old 5 year bond maturing which has £9k in it.

I'm trying to help advise on where would be best to re-invest it. She doesn't need it in the foreseeable future so it could be tied up again.

Best 2 year fix seems to be 2.1% with Virgin.

Whereas with Santander 123 account, as a basic rate taxpayer she would receive net 2.4% interest. This seems to work out to £216 interest a year, less the £24 account fees this comes out a few pounds more than putting it into an ISA.

Would she be best to put it into a Santander 123 account now and then move it into an ISA just before the end of the tax year?

If I've misunderstood or miscalculated would be grateful for any advice.

Many thx in advance.

jimjames

waterwatereverywhere wrote: »

Would she be best to put it into a Santander 123 account now and then move it into an ISA just before the end of the tax year?

Two questions to consider...

1) Why Santander and not accounts paying 5% and 4% instead?

2) Why move it into an ISA in March at a worse rate than it has?

Also worth looking into investments if they have no need for the money and want to lock it up.

jamesd

There is little reason to use an ISA when the after tax interest rate is lower than the alternatives, unless the annual allowance is low enough that you expect to use it every year. If that doesn't apply, then just go for the highest interest rate.