ISA or Club Lloyds 4%?

money__maker_4

What is better value for money, saving in my 1.5% cash ISA or transferring it to my club Lloyds account which will pay me interest of up to 4% on certain balances?

I have £2500 in my ISA.

YorkshireBoy

I'll say Lloyds (but I've made several assumptions about your income, average balance, and tax status). Am I right?

bowlhead99

The 'certain balances' they pay that high rate on is £4k-£5k; a smaller total balance and it would only qualify for a lower rate, and anything over that amount doesn't earn any interest at all. So if you already have an average balance of £2k in your current account, then by adding the ISA money you will have an average balance of £4500 and you would earn 4% on all that for most of the month. That's a good deal because the current account balance wouldn't earn much on it's own and the ISA isn't earning much on its own, you are better off putting them together which could be quite lucrative.

If like many people your current account where you get paid and from where you pay your bills only has a few hundred quid in it for most of the month, then adding the £2500 from your ISA you'll be sitting with an account balance at Lloyds that's mostly in the £2k to £4k range, which only pays 2% before tax, which is only 1.6% after tax for a basic rate taxpayer. So, not much better than the 1.5% tax free ISA.

Whether it is worth it to move the money depends on how much cash you already have in your current account, or perhaps how much you are likely to be able to increase your balances over the coming months to qualify for the higher (4%) rate.

If your current account is looking pretty threadbare, consider Nationwide, as their Flexdirect account pays 5% so at least you would be getting £125 a year before tax which is a great deal more than you are getting in the ISA. That account reverts to a lower rate after a year so it depends if you can be bothered to shop around again at that point.

Archi_Bald

money__maker wrote: »

What is better value for money, saving in my 1.5% cash ISA or transferring it to my club Lloyds account which will pay me interest of up to 4% on certain balances?

I have £2500 in my ISA.

Answer: £1,250 into a FlexDirect and £1,250 into a TSB Plus, both at 5%. £2,500 is not enough for a good Club Lloyds as you would only get 2% for your sum of money.

jimjames

TSB and Nationwide as above.

Feed the money through Halifax too and you'll boost your returns even more.

£125 at 5%
£75 from Halifax at £5 per month

Total £200 = 8%

No ISA comes anywhere near that return. Who says that interest rates are low

puk999

jimjames wrote: »

Who says that interest rates are low

You:

jimjames wrote: »

Interest rates may be low but...

jimjames

puk999 wrote: »

You:

Whoops....