What should I do with my cash ISAs?

d712

Hello


I have 3 cash ISAs all of which will expire in the next 6 weeks.


I'm looking for advice on what to do with them as interest rates are currently so low.


My next ISA will be stocks and shares and will be putting the full allowance into that. All my previous ISAs have been cash.


I don't want to transfer my existing cash ISAs into stocks and shares until I have more experience and knowledge about it.


Should I transfer my cash ISAs into one short term cash ISA so I can transfer them again into another ISA when interest rates go up?


Thanks

masonic

Why not delay putting any more money into next years ISA and instead transfer one of your existing cash ISAs to S&S (or an appropriate portion of it). Make use of high interest current accounts (if not already doing so) in the interim and you can make the decision at the end of the next tax year when the situation may well be different.

d712

Thanks for your response


I won't be transferring any of my cash ISAs into a stocks and shares ISA. I think the £15000 that I will be putting in before the end of this tax year is already enough to start off with.


When you say make use of high interest current accounts do you mean that I should take money out of my cash ISAs and put them into current accounts?


If so, I didn't want to lose the option of that cash earning tax free interest at a later date.


Sorry if I've misunderstood what you've said.

colsten

d712 wrote: »

When you say make use of high interest current accounts do you mean that I should take money out of my cash ISAs and put them into current accounts?

The suggestion is that you transfer your existing ISAs into S&S. Keep new money in current accounts whilst you familiarise yourself with investments. You have until April 5 2016 to use your 2015-16 ISA allowance.

As we don't know how much you have in your cash ISAs, and how much you are willing to put into S&S ISAs, this may or may not be a good suggestion.

masonic

d712 wrote: »

I won't be transferring any of my cash ISAs into a stocks and shares ISA. I think the £15000 that I will be putting in before the end of this tax year is already enough to start off with.

Ok, I thought you were intending to use your 2015/16 allowance for the S&S ISA.

When you say make use of high interest current accounts do you mean that I should take money out of my cash ISAs and put them into current accounts?
If so, I didn't want to lose the option of that cash earning tax free interest at a later date.

I don't think you should remove any money from your cash ISAs because it seems you are saving at a rate that wouldn't allow you to replace the money taken out. What I was suggesting is not using your 2015/16 allowance until the end of the next tax year, rather than putting the money in at the outset.

colsten

d712 wrote: »

Should I transfer my cash ISAs into one short term cash ISA so I can transfer them again into another ISA when interest rates go up?

It's probably going to be many many years before savings/ISA rates will go up again. Did you see, Nationwide and First Direct are now offering 10-year fixed rate mortgages with 2.89% APR? They wouldn't be offering these rates if they felt rates would be going up anytime soon.

d712

What am I planning to do is use this year's full allowance in an S&S ISA before April.


After that I will probably continue to invest in S&S ISAs in the subsequent years.


My question is what to do with the cash ISAs that I already have that expire in 6 weeks?


I don't want to transfer anything from my existing cash ISAs into S&S ISAs.


Should I put them into a short term cash ISA in the hope that interest rates will increase?


Thanks

d712

colsten wrote: »

It's probably going to be many many years before savings/ISA rates will go up again. Did you see, Nationwide and First Direct are now offering 10-year fixed rate mortgages with 2.89% APR? They wouldn't be offering these rates if they felt rates would be going up anytime soon.

Thanks, in that case, what would you recommend?


I have about 40k in cash ISAs.

masonic

If I was intent on keeping the cash ISAs in cash ISAs I'd probably go for the Coventry BS 4 year fix @ 2.25%. The money can be pulled out with an interest penalty if rates really do shoot up, but I think it's very unlikely they will.

d712

Thanks


Do you know how much a typical interest penalty is for example as a proportional of the interest due?

masonic

d712 wrote: »

Do you know how much a typical interest penalty is for example as a proportional of the interest due?

The penalty is 120 days interest. If you only keep it for a year it would reduce the effective rate to ~1.5%, for two years, ~1.9%, etc.