We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
Fixed term ISA - 2/3 years vs regular savers
This financial year I had to close an ISA early to get the funds for a deposit on a car as old one was BER - I was planning on buying an ex-demo cash but was tempted by a 0% deal on a new one to allow me to earn interest and keep the "rainy day fund".
I currently have £17,000 in an online saver (0.9% interest, was just quick to open up and better than current account) and I intend to get an ISA again in April. I was thinking of putting in approx. £10,000 to cover the payment at the end of the finance deal (due May 2018) - currently fixed term ISAs are around 1.88%-1.95% for 2 years or 2-2.15% for 3 years. I appreciate interest rates are likely to be low for years but a rise next year is possible and I don't want to be locked into a low ISA rate if the rates do notch up a little in 2016 or 2017.
I am also putting away the max (£250 a month) into a Leeds BS Fixed Saver (3.05% which will be taxed) which I opened in December which matures in October but can continue being invested in
Does it make sense to use say the Post Office 2 year fixed 1.95% and see what happens for the final year (obviously offers come April might be nicer)? I don't want to put all the cash in an ISA as I need some liquidity for the car and Leeds payments. I will probably close the Leeds thing in November 2016 and put the cash in a new ISA as interest rates might be better then.
I have not really looked to move to one of the new current accounts as I am not sure if the taxed interest is worth more than my current account with breakdown, travel and mobile insurance (£10 a month job)
Thanks
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
Comments
-
Lots of current accounts and Regular Savers offer you better interest rates than the ones you listed. All mentioned on the forum.0
-
Hmm thanks for that, switching to First Direct and earning £125 plus opening up access to their saver does seem good, the Santander one is not so useful as I don't pay the bills so the cashback isn't great but - the TSB one also seems decent (Lloyds needs more than my monthly salary) too.
I shall have a look at these, cheersSam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
0 -
Forget about the cashback then, the important bit is 3% interest on £20,000.
Yeah I'm weighing this up - lot to think about, sorry for doing the maths "out loud"!
123 is decent but the £24 fee takes a chunk out of the savings that would be in the current account as I make payments on the car and the saver plan - 3% on a 17,000 is about £408 a year after tax (but this sum will obviously decrease each month due to outgoings - £259 on car, £120 on a 0% BT card, £250 on the Leeds one - though that can be closed at the end of the saver period and money moved - £100 on pension - nearly £750 a month before salary goes in).
The First Direct one is £125 for switching and grants access to the 6% saver but that is 1 year at £300 a month then reverts to 0.25% so more suitable for the one year.
If I can get an ISA at 2.2% it is about even with leaving the cash in the current account (£374) so I think in April it would be best to see what rates are available for a fixed ISA before deciding Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
0 -
....then please tell the rest of us where you found it
I am talking about 2 year fixed but yes it is optimistic but PO do 1.95%, Virgin do 1.88% and this is for current tax year - hoping they might bump it up a bit to entice investors Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
0 -
Was having a quick look at cash ISAs the other day. Although it doesn't help in this case, the Clydesdale Bank/Yorkshire Bank 40-day notice account paying 2% for over £24k wasn't the worst I've seen recently:
http://www.ybonline.co.uk/personal/savings/tax-efficient-savings/cash-isa-40-day-notice/0 -
(Lloyds needs more than my monthly salary)
Doesn't matter. The payment doesn't have to be one lump, and it doesn't have to be salary. Have a read of the board for techniques.
Also there are accounts paying a true 3% AER (no fee).Eco Miser
Saving money for well over half a century0
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351.1K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.6K Spending & Discounts
- 244.1K Work, Benefits & Business
- 599.1K Mortgages, Homes & Bills
- 177K Life & Family
- 257.5K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards