Transferring money from ISA to Current Account

Munchie

Please bear with me as I am new to the multiple current accounts to gain better interest game.


I currently have a Tesco ISA, paying 1.75% interest and have recently opened a Tesco current account.


As the interest rate being paid on the current account is higher than the ISA would it be more beneficial to transfer some of the money out of the ISA to the current account?


Thanks.

Steve_xx

Yes it may be beneficial, at least in the short term. However, do remember that once you remove it's tax wrapper, you cannot put it back there.


In addition, your 1.75% in your ISA is paid gross, whereas interest although at 3% in the Tesco current account, is taxable @ 20% at least. So suddenly it doesn't look quite so attractive as it did at first glance!

badger09

Munchie wrote: »

Please bear with me as I am new to the multiple current accounts to gain better interest game.


I currently have a Tesco ISA, paying 1.75% interest and have recently opened a Tesco current account.


As the interest rate being paid on the current account is higher than the ISA would it be more beneficial to transfer some of the money out of the ISA to the current account?


Thanks.

Depending on how much is in your ISA, withdrawing money from it to put into current accounts could be a very good idea.

However, you could get more than Tesco's 3%. TSB, Nationwide Flexdirect, Club Lloyds etc.

Munchie

I currently have just over £5k in the ISA and wanted to put £3K in the current account.


I already have 2 x TSB Classic Plus accounts.

Steve_xx

Munchie wrote: »

I currently have just over £5k in the ISA and wanted to put £3K in the current account.


I already have 2 x TSB Classic Plus accounts.

In that case you may want to consider the Club Lloyds account that pays 4% on balances between 4 and 5k and also gives you a lifestyle benefit but you need to pay 1500 a month into it.


Oh hang on a minute, if you only want to put 3k into the account then another Tesco current account will suit you better.

YorkshireBoy

Munchie wrote: »

I currently have just over £5k in the ISA and wanted to put £3K in the current account.

I already have 2 x TSB Classic Plus accounts.

Let's keep things simple. Close the ISA (or leave just £1 in it), open another Tesco current accounts and fund each with £2,500.

Set up a pair of cross-firing SOs (as you've possibly already done with TSB?). Then sit back and do nothing!

Alternatively, if you can be bothered with DDs and account management, go with the aforementioned Club Lloyds account.

Mr_Goodkat

With only £5k in an ISA (especially if you are a basic rate tax payer) move it to a high interest paying current account - Club Lloyds at 4% on £5k would be best with you having two TSB accounts already. Set up two DDs (Tesco savings accounts would be fine at £1 each a month) and fund with £1,500 a month.


With NISA limits now at £15k you can easily get money back into a tax wrapper if and when required.

Archi_Bald

Steve_xx wrote: »

However, do remember that once you remove it's tax wrapper, you cannot put it back there.

You can very easily put it back into an ISA if you only have got £5K.

mgdavid

Archi_Bald wrote: »

You can very easily put it back into an ISA if you only have got £5K.

an ISA, yes - but not the ISA unless it's this year's ISA..

Archi_Bald

mgdavid wrote: »

an ISA, yes - but not the ISA unless it's this year's ISA..

I commented on the tax wrapper, not any specific ISA.

However, commenting on your post now: in the vast majority of cases, you wouldn't want to put any money into a previous year's ISA, anyway, as the interest rates for those are even worse than the rates you can currently get.