Saving accounts or Cash ISA

Cpu2007

Hi everyone

Need some advice on this matter now and will really appreciate that if someone can provide some guidance.

I am in the process work out what to do with some of the saving I have at the moment.

The options that I am aware of are as follow:
-Regular Saving account
-Cash ISA

I have around 5k in saving

I have noticed that there are two 6% regular saving accounts and I thought these are probably the best one as I should be able to get a decent amount out of it(even after tax)

I will eventually have more saving but yet I feel like that even if I fill a cash ISA account, it doesn't seem to give a good return.

If you think there's anything else with better return then please let me know.

When it comes to money, I would say that I can keep them for a year but I always prefer to have the possibility to withdraw money without any charges so something with that sort of flexibility will be good.

Thank you

savings_my_hobby

Use the TSB classic account and max it out up to £2000 and Nationwide flexdirect and max it out up to £2,500 is your best bet, then once per month exchange £1000 between the accounts on the same day to satisfy the requirements and this will get you 5% gross interest - check it out

masonic

Cpu2007 wrote: »

I have noticed that there are two 6% regular saving accounts and I thought these are probably the best one as I should be able to get a decent amount out of it(even after tax)

You might not have to pay tax, since the First Direct one (and presumably also the HSBC and M&S ones) only pay interest at maturity. If you give it a week, maturity will be after the start of the 2016/17 tax year when the changes to tax on savings interest are supposed to kick in.

YorkshireBoy

savings_my_hobby wrote: »

this will get you 5% gross interest - check it out

I have, and I make it 4.89%

Cpu2007

thank you guys
I will check this out.
masonic, you're basically saying that I have to keep the money in my account for 12 months and because they mature at the end of 12 months, by starting after the financial year and therefore ending in the new financial year of 2016, I will not have to pay any tax on it?

Eco_Miser

Cpu2007 wrote: »

The options that I am aware of are as follow:
-Regular Saving account

I don't think that means what you appear to think it means.
A Regular Savings account is for saving regularly, i.e. monthly, not for lump sums. I think you were thinking of a standard Savings account, which currently pay around 1%. -

Cpu2007 wrote: »

Cash ISA

I have around 5k in saving

I have noticed that there are two 6% regular saving accounts and I thought these are probably the best one as I should be able to get a decent amount out of it(even after tax)

You get 0.5% per month, on a small balance which increases each month as you add more; all the interest is added at the end of a year, and the account becomes a standard saver at a derisory rate. At which point, you move the money somewhere better, open a new Regular Saver, and start again.
If you open the account after 6th April, then, assuming the changes announced in the budget go through, you'll pay no tax on the first £1000 of total interest you receive in 2016/17 including all the interest on such a Regular Saver.

As to where to put your £5k, see the Top Savings Accounts link at the top of the page, and look at the current accounts like TSB, Nationwide, Club Lloyds, BOS, Tesco and Santander. The interest on these is paid monthly, so will be taxed each month until May 2017, assuming you are a taxpayer.

masonic

Cpu2007 wrote: »

masonic, you're basically saying that I have to keep the money in my account for 12 months and because they mature at the end of 12 months, by starting after the financial year and therefore ending in the new financial year of 2016, I will not have to pay any tax on it?

Yes, but this of course assumes the changes announced in the budget actually happen. It is likely that they will, but there is always a risk that they won't. If they don't you'll have still earned a good rate of interest after tax though.

Cpu2007

wouldn't santander beat all of these accounts?
I know I have only 5k but the account allows to save up to 20k, so I don't have to worry about all the 2k or 4k limits that are in place in other accounts.

ps:there's a 24£ fee as well
so if the budget is activated then I'll be getting
5k > £150 - 24£(fee) = £126
If not:
5k >£150 - 20%(£30) - 24£(fee)= £96

is my calculation correct?

bowlhead99

Your calcs are fine (although remember that the budget saving from the new tax rate only applies to interest payments received AFTER the date it comes in on - i.e. from 6/4/16 assuming the new rules are passed). But no, Santander wouldn't "beat all of these accounts".

For example if you had £5k at Lloyds you would get £200 instead of £150 and there is no £24 fee. If you had £2k in TSB and £2k in another TSB and 1k in Nationwide you would get £250 instead of £150 and there is no £24 fee.

The higher the interest rate, the more you make from the account on whatever you can put into it for as long as you have it in there. Even if it's a regular saver so you only have the money in it for part of the year - if the headline rate is higher, it is 'better'.

Of course whether one account beats another in your personal opinion, is probably down to practicality as much as pure interest earned.

If I had £5-£20k I might much prefer to just run one Santander account, and as you say, not have to worry about the limits in place in other accounts and make the money dance around all the time. Others would prefer to do the extra work to make more money where they could. We all have different views on what financial reward it takes us to be bothered to do something. For some people time is money and not having to remember to meet terms and conditions is lower stress.