From ISA to Current account?!?

mat.83

Apologies if this has already been asked a million times by other people (done a very quick search and couldnt find anything posted previously.)

I could really do with a bit of advice regarding my saving accounts.

I currently have have Santander 123 account with £10400 and Santander ISA with £18000.

I have been building my ISA up for years- however last March I only got paid £180 interest for the full year. My 123 account however - I have worked out I would get approximately roughly £40 *per month* if I topped it up to £20,000 using the money from my ISA.

What are people thoughts on doing this? I have always been told to NEVER touch money that I have placed in my ISA. However the poor interest rate compared to my 123 account is very significant.

I doubt I will have any further savings to put in either accounts over the next few years.

Should I leave my ISA as it is, or transfer it to my 123 account?

If anyone can give me some advice I'd be very grateful. Again apologies if this has been asked loads of times before!!

Thanks.

System

No right or wrong answer. Short term you would gain by moving it into the 123 account. Long term you would lose that tax free money.

Another option would be to transfer the ISA in to a better paying ISA account (OK rates are poor, but they won't be forever). Really depends on your circumstances. e.g. what rate of tax do you pay? can you fill the 15k allowance each year in any case? do you have mortgage and what the rate is on that? etc...

YorkshireBoy

mat.83 wrote: »

Apologies if this has already been asked a million times

Not a million...but we're probably well into 3 figures now.

I have always been told to NEVER touch money that I have placed in my ISA.

Conventional wisdom went out the door when the allowance was lifted to £15K earlier this year.


I have a small sum myself in a Santander ISA (paying 1.6% AER from memory), but only because I've no room left in my 3%, 4%, & 5% paying current accounts.


You could get £6.5K of your ISA sum into 5% accounts (£2.5K of it for only a year though), £5K of it into a 4% account, and then slip the rest into your 1-2-3 account.


Then re-assess the situation in March next year (assuming you haven't already paid anywhere near £15K into your ISA this tax year?).

Archi_Bald

mat.83 wrote: »

Apologies if this has already been asked a million times by other people

You are right, it has been indeed been covered numerous in one way or another already.

mat.83 wrote: »

I doubt I will have any further savings to put in either accounts over the next few years.

What are you saving for? Spending in the next 3-5 years? Nest egg for later in life (10+ years)? Both?

Anything this side of 5 years, you should keep in cash, and with the current rates and the amount you are talking about, it could all go into current accounts (until cash ISA rates, may be, recover). There are accounts that pay even more, albeit for smaller max amounts than the 123. Enough to take your entire £18K from the ISA. http://www.moneysavingexpert.com/savings/savings-loophole.

Plus you could drip-feed a few regular savers, the ones that pay 4 and 6% for instance: https://forums.moneysavingexpert.com/discussion/comment/6932895#Comment_6932895

Anything you can keep locked away for longer than 5 year, you should consider an S&S ISA for as equities historically outperform cash. Plenty of reading about this around: https://forums.moneysavingexpert.com/discussion/5043692