Interest current account vs ISA

JoeBG90

Hi there,

Frequent viewer, first-time poster.

I've recently opened the 123 Santander current account with 3% AER (I have the £3,000 balance already so I am earning the 3% straight away. Also, I have opened the 2.59% ISA with nationwide. Now, my question is this: should I move my funds from the ISA to the 123 account? I am technically earning a better interest, which is not a one-year fixed rate with the 123 account. Now this is a seemingly obvious decision. However, the only issue I have is about the taxable interest on the 123 account. Am I worse off having all my funds in the 123 account due to the tax or am I better off putting large sums in the ISA as it's tax-free?

I do apologise in advance if I seem like a novice in this, even though i technically am. I do not require any sarcasm as I have plenty of my own.

Thanks

[Deleted User]

Hi,

if you are a basic rate tax payer you will pay 20% on your 123 account, so 2.6%, remember your £2 a month fee and rebate on DD's.

Edit: I like sarcasm, it's the cutting edge of humour.

JoeBG90

Thanks. So I should stay as I am then

Just wanted to double check!

P.s I enjoy sarcasm as much as the next man!

[Deleted User]

Hi,

well if you have the £20,000, @ 2.59% is £518, @ 2.60% is £520, £2 over a year, will buy you a half pint.

badger09

[Deleted User] wrote:

Hi,

if you are a basic rate tax payer you will pay 20% on your 123 account, so 2.6%, remember your £2 a month fee and rebate on DD's.

Edit: I like sarcasm, it's the cutting edge of humour.

3% after 20% tax is 2.4% not 2.6%

Not a sarcastic comment in sight

kidmugsy

The Plus account at TSB pays 5% gross; you are allowed to open two.

evenasus

badger09 wrote: »

3% after 20% tax is 2.4% not 2.6%

Not a sarcastic comment in sight

I was waiting for someone to correct him.

Which means, there would be a difference of £40 not £2.

[Deleted User]

Hi,

badger09 wrote: »

3% after 20% tax is 2.4% not 2.6%

Not a sarcastic comment in sight

oops, , bad maths, thanks.



100 lines,

I am a dunce,

I am a dunce, etc.

Archi_Bald

2.59% sounds like a Nationwide Regular Savings ISA so you wouldn't be able to put more than £1,250 a month into it.

£1,250 a month saved over 12 months earns you £209.62 in that ISA.

If you can put the £15,000 into a 123 in one go, you earn £360 net after BR tax.

If you put £1,250 a month into the 123, you only make £191.71 net after BR tax.

JoeBG90

Okay now I'm a little confused. I have the £3000 in the Satander account and the ISA (you're right it's the regular one) has £1250 and I've got £500 to go in from now on every month. Are people saying it's better to have the Santander account? :P sorry I'm an idiot!

YorkshireBoy

JoeBG90 wrote: »

Okay now I'm a little confused. I have the £3000 in the Satander account and the ISA (you're right it's the regular one) has £1250 and I've got £500 to go in from now on every month. Are people saying it's better to have the Santander account? :P sorry I'm an idiot!

I'm assuming you're a basic rate tax payer?

So your question is really, do you want to make 2.59% at Nationwide or are you happy with only 2.37% (maybe a touch more, but nowhere near the 2.4% AER before next April, due to monthly compounding) at Santander?

Does that help?