Where to save?

Wayne87

Hey Combatruck,

I'll give you my thoughts but I am a new poster myself, so please take them with a pinch of salt - some of the far more experienced members here can probably give much better advice than me.

If I have read your posts correctly, it sounds like you are considering removing your money from your (poor paying) Isa and placing it into a high interest current account. I would be careful about doing this.

In my opinion - and everybody has one! - I would normally say fill your ISA allowance first, and anything else thereafter. The £200+ interest you would earn in a Santander 123 account is lovely, but who knows how long that perk will be around for? (I'm guessing a while, as it is winning them customers but my point is, if it disappears in 12 months, you will have lost your ISA tax free perk for £200. At that point, I think the £200 might feel quite small to you).

If I were you I would transfer the ISA money to a better paying ISA (I say "Transfer" specifically. Don't get confused and withdraw it or you will lose your tax free goodness. Use a Transfer form). There are lots of good ISA's in the ISA section of this site. With an easy access you can earn about 1.5% at the moment and over 2% with a longer term.

Once your ISA is sorted, if I were you I would then tidy up your other accounts. TSB (classic), Lloyds and Santander (123) are offering nice cash back current accounts, but be aware that you will not qualify for all of them if you are only paying in 600-700 PCM. (This is completely from memory so please forgive me if I'm wrong, but I believe Santander requires £1,500 P/M and TSB £500 PCM).

So in summary, I would transfer your £10k to a healthier ISA, and then set up a TSB classic account (pay in 500 PCM and choose paperless to qualify for the 5% interest on £2000).

I hope this helps! If I've gotten anything wrong somebody will hopefully point it out

Archi_Bald

Wayne87 wrote: »

In my opinion - and everybody has one! - I would normally say fill your ISA allowance first, and anything else thereafter.

The opinion of MSE Towers is just the opposite: http://www.moneysavingexpert.com/savings/which-saving-account

Archi_Bald

combatrock wrote: »

Also, can someone explain to me how tax works on current accounts? Is it paid annually? if i have two different current accounts with two different banks, will i be charged two lots of tax or only one?

Also if it is annual and i move all the cash into an isa before the end of the tax year will i still have to pay the tax?

You shouldn't get so hung up about tax. Ask yourself whether you will do better paying no tax on 1.5% interest or 20% tax on 3, 4 5% interest.

Wayne87

Archi_Bald wrote: »

The opinion of MSE Towers is just the opposite:

You are correct to flag me up, I've not said what I intended to here - sorry folks.

I myself use high interest current accounts until March, then pay into an ISA after taking the interst for a year. I negated to say that as the money here is already in an ISA. I'd always rather leave my existing ISAs tax free and then fill high interest current accounts with new money, but I acknowledge there is a short term loss there.

Apologies if I clouded the waters.

enthusiasticsaver

Wayne87 wrote: »

Hey Combatruck,


Once your ISA is sorted, if I were you I would then tidy up your other accounts. TSB (classic), Lloyds and Santander (123) are offering nice cash back current accounts, but be aware that you will not qualify for all of them if you are only paying in 600-700 PCM. (This is completely from memory so please forgive me if I'm wrong, but I believe Santander requires £1,500 P/M and TSB £500 PCM).

So in summary, I would transfer your £10k to a healthier ISA, and then set up a TSB classic account (pay in 500 PCM and choose paperless to qualify for the 5% interest on £2000).

I hope this helps! If I've gotten anything wrong somebody will hopefully point it out

The Santander 123 current account only requires £500 per month to fund it. OP, ISA rates are really poor at the moment so you would probably do better to stick to high paying current accounts. Now the allowance has increased to £15k per annum if the rates ever did improve it would not be a problem to regain your isa status. Do not get too hooked on tax free - it is of little use if the interest rates are rubbish.

combatrock

Hey, thanks for all the advice.

Regarding the tax and isa.. am i right in thinking only the interest is taxable?

So the 123 account would grant 3% on 10k with 20% tax on that 3% and then a fee of £22 or whatever it is.

so £300 interest - £60 tax - £22 fee = £218


vs isa at 0.5 % = £50

so the 123 account is clearly much better, is this correct?

wieczor

Hi


I am in similar situation my ISA with Halifax expires soon. I had 1.5% with them on 1year fixed term now it will drop to 1.4%. I have about 6500 on it.

Year ago I moved to Halifax it was very good deal
100 pounds for switching 60 pounds for rewards and 97.5 on ISA.


This year I am thinking about moving everything to Santander gaining from Current account + taking Credit Card to get some cashback.


If You would switch to Halifax you will get
125 for swiching
60 for rewards if you will have 2 DD and pay in 750 each month (you can pay some money out an pay back in to have that)
140 pounds on Halifax ISA 1,4% x 10000 you have got.

=325 pounds

You could do all that in one place so it would save you time.


With santander you need to pay 2pounds per month for account so you would gain.

218- 24 = 194

combatrock wrote: »

Hey, thanks for all the advice.

Regarding the tax and isa.. am i right in thinking only the interest is taxable?

So the 123 account would grant 3% on 10k with 20% tax on that 3% and then a fee of £22 or whatever it is.

so £300 interest - £60 tax - £22 fee = £218


vs isa at 0.5 % = £50

so the 123 account is clearly much better, is this correct?

Archi_Bald

wieczor wrote: »

With santander you need to pay 2pounds per month for account so you would gain.

218- 24 = 194

Many people make a lot more than £2 a month from DD cashback, so the fee can easily be avoided by most.

But your numbers for the 123 are wrong anyway as combatrock had already taken £22 of the £24 off.

What is even more important is that it should not be a question of Halifax Reward or 123 - there is really no reason why people shouldn't have them both.

wieczor

Yes you are right but having them both 123 + halifax wouldnt be more complicated ? and would that bring him more than 325 ?

He could use Halifax to get 125 + 60 for getting his earnings on account and

123 for storing his 10000 cash witch would bring him 218

403 together.

Is that what you was thinking about ?


The reason why in these circumstances he should have both is that he couldn't take full advantage from both accounts.

Archi_Bald wrote: »

Many people make a lot more than £2 a month from DD cashback, so the fee can easily be avoided by most.

But your numbers for the 123 are wrong anyway as combatrock had already taken £22 of the £24 off.

What is even more important is that it should not be a question of Halifax Reward or 123 - there is really no reason why people shouldn't have them both.

Archi_Bald

wieczor wrote: »

The reason why in these circumstances he should have both is that he couldn't take full advantage from both accounts.

Sorry, you lost me.

Everybody with a bit of cash should be able to make use of the Halifax Reward (and the Halifax switch offer) alongside one or more other current accounts.