ISA Queries

D_Harwood

Archi_Bald wrote: »

Your figures are flawed as you ignore the cost of the overdraft.

The overdraft is interest free because I'm a student so there is no cost.

Archi_Bald wrote: »

What you need to compare are the AERs of the ISA and the non-ISA accounts (taking into account tax).

I thought I had done this - as I understand it, the TSB current account that offers 5% will give 4% interest after tax and the interest on the ISA isn't taxed.

D_Harwood

jimjames wrote: »

Why would you pay off your overdraft? There is no difference whether your £300 is in an ISA or current account or savings account.

Ah, is it possibble to open another current account without paying off my overdraft? Does it depend on the bank/account type etc.?

I assumed there are regulations that prevent you using a current account as a savings account and leaving a current account with an overdraft open and inactive.

Dylan

masonic

D_Harwood wrote: »

Ah, is it possibble to open another current account without paying off my overdraft? Does it depend on the bank/account type etc.?

Yes, if you had several accounts with overdrafts you might have more difficulties getting additional overdraft facilities elsewhere, but you can apply for the current accounts without asking an overdraft, in which case it won't matter what facilities you already have,

I assumed there are regulations that prevent you using a current account as a savings account and leaving a current account with an overdraft open and inactive.

Not at all. It is very common and known as stoozing. The only reason I made use of an interest free overdraft when I was a student was so that I could put the money in a high interest account.

D_Harwood

masonic wrote: »

Not at all. It is very common and known as stoozing. The only reason I made use of an interest free overdraft when I was a student was so that I could put the money in a high interest account.

Excellent, I didn't realise it was allowed.

Looks like a high interest current account is the way forward then?

Thank you everyone who replied for your time and help!

Dylan.

D_Harwood

Struggling to find a high interest account that doesn't require monthly payments of at least £500.

Won't have enough monthly income (or enough of a lump sum to add required amounts each month for a year) to meet this, so is an ISA a better option for me after all?

Dylan.

masonic

D_Harwood wrote: »

Struggling to find a high interest account that doesn't require monthly payments of at least £500.

Won't have enough monthly income (or enough of a lump sum to add required amounts each month for a year) to meet this, so is an ISA a better option for me after all?

The monthly payments don't need to be from income. You just need to transfer the money from another account. Having a couple of accounts (or more) allows you to set up a standing order from one to the next so that essentially you are just cycling the same money around.

D_Harwood

masonic wrote: »

The monthly payments don't need to be from income. You just need to transfer the money from another account. Having a couple of accounts (or more) allows you to set up a standing order from one to the next so that essentially you are just cycling the same money around.

Can I put in the whole amount on opening the account and just manually transfer £500 to an old account and then back again? Or does the balance need to increase by £500 each month (even if it subsequently decreases again).

Also, Is there any penalty for not meeting the requirements? Other than gaining a basic rate of interest for the month?

Thanks,

Dylan.

masonic

D_Harwood wrote: »

Can I put in the whole amount on opening the account and just manually transfer £500 to an old account and then back again? Or does the balance need to increase by £500 each month (even if it subsequently decreases again).

Also, Is there any penalty for not meeting the requirements? Other than gaining a basic rate of interest for the month?

Yes, you just need to transfer the money out and back in again.

In terms of penalties, for the TSB account you just won't earn interest in a month where you don't meet the requirements (£500 funding and paperless billing/correspondence selected in their online banking system).

D_Harwood

masonic wrote: »

Yes, you just need to transfer the money out and back in again.

In terms of penalties, for the TSB account you just won't earn interest in a month where you don't meet the requirements (£500 funding and paperless billing/correspondence selected in their online banking system).

Brilliant. Thanks again!

colsten

You do not have to switch to TSB in order to get one of their TSB Plus accounts. As of now, they are also not offering any switching bonus so there's no point in switching. It's just their Marketing department talking.

You do need to learn how to read T&Cs as it is them that govern your relationship with the bank, not what someone on an internet forum says.