Never, ever, ever, ever withdraw money from a cash (N)ISA!?

patey

Hi,

I have about 25k sitting in an old ISA earning 0.5% APR and I want to improve this. Please could you tell me if you think my plan is sensible?

I have applied to open a new fixed rate ISA with Coventry BS earning 2.75%, which was one of the recommendations in the main article. Since this account doesn't accept transfers I thought I could simply withdraw 15k from my old ISA and pay it in to the Coventry BS ISA. Then I could transfer the remaining balance of the old ISA to another ISA that does accept transfers in.

I realise that by doing it this way I will use up this year's 15k allowance, but I don't anticipate being able to save very much between now and April anyway. Is there some other drawback to withdrawing the money like this that I haven't realised?

The main ISA articles state quite emphatically that you should never withdraw, so it made me stop and think. Also, I am not sure if there is some slight difference between NISAs and ISAs that I am not aware of.

Archi_Bald

Apart from the silly N, there is zero difference between ISAs and NISAs. Your plan to move your money makes sense as you are doing it in the knowledge that you will use up your allowance for the year.

You might find that it would make even more sense to put some money into interest paying current accounts and also drip-feed some regular savers as some pay you more than an ISA.

Best regular savers are with First Direct, HSBC and Lloyds. Best interest paying current accounts are with TSB and Lloyds.

Gram_Parsons

NISA is just the new term for an ISA - no difference.

You could get 5% before tax on £4000 (or more with joint a/cs) via TSB then stick the rest in Santander at 3% before tax on balances between 3K and £20K and also get cashback on selected DDs which can be quite decent.

That's what I'd do.

Archi_Bald

A 3% current account would not yield 2.75% after tax. 4% and 5% current accounts would, for a basic rate tax payer.

patey

Thank you both for your advice. For now I will move 15k into the ISA while I look into regular savers etc. for the remainder.

Have a good weekend.

Triumph13

This thread demonstrates that for many people there is a BIG difference between an ISA and a NISA. The near tripling of the annual allowance changes the ISA wrapper for many savers from something that needs to be carefully hoarded and built up over the years, to something which you can be much more blase about withdrawing from and refilling - particularly for couples who can now stick up to £30k a year in between them.

GeddesASaver

Hi, sorry am new to forum but this thread caught my eye but alas I have failed to understand. I have an isa about to finish. Am I right in thinking that if I transfer into my current account which awards 2.4% after tax, that would be a better option then an NISA which offers less then 2.4%. I am very confused

colsten

If you are planning on saving a lot more than £15K in the next few years, it might be better to leave your money in the ISA wrapper. If it is less, or if your know you will spend the money in the next 2-3 years, you will earn more interest in current accounts. There are some that pay 4 and 5%, not just 3.

atush

It would be the same, not better as the net interest you gain in both cases is 2.4%.

The isa status would be lost forever, but as an above post says, with 15K each year to put in, if you dont use it all you can swap around.

Dont forget your 15K allowance includes S&S isas which can be preferable in a low interest environment.

Eco_Miser

atush wrote: »

It would be the same, not better as the net interest you gain in both cases is 2.4%.

GeddesASaver said the NISA pays less than 2.4%; so their current account would pay more.

Daz2009

Gram_Parsons wrote: »

NISA is just the new term for an ISA - no difference.

You could get 5% before tax on £4000 (or more with joint a/cs) via TSB then stick the rest in Santander at 3% before tax on balances between 3K and £20K and also get cashback on selected DDs which can be quite decent.

That's what I'd do.

Where is this 5% TSB account you talk about ?