Previous ISA's and what to do now

D_S_P

Hello

I'm sorry for being money/ISA stupid but i just am, so apologies for my following question.

I have a few old ISA's that all have around £1500 in and have interest rates of less than 2% (mostly a lot less) I normally just open a new ISA every tax year and deposit £120 a month into it and then open a new one the next year. Mostly the new ISA's don't allow a previous ISA transfer so I end up with lots of accounts with a small amount of money in.

I haven't opened or paid into an ISA this new tax year as the rates are so poor and from reading the forums I shouldn't. I've read about putting my money into a current account with a better rate but what about the cardinal rule of

"Never, ever, ever, ever withdraw money from a cash ISA! You'll immediately lose all the tax benefits."

and then i see people recommending that people should do just that. I already have a Club Lloyds account with the £5000 to get the top interest from that so I would need to open a new current account. The Club lloyds account is our main account for paying bills so if I opened another current account could i transfer money into it to the new account meet the requirements and then take it out a couple of days later and then just use it as a savings account with the money transfered from my ISA's?

From what ive read on the forums ISA's aren't worth bothering for my level of investment.

Thanks in advance for your help

jimjames

D_S_P wrote: »

"Never, ever, ever, ever withdraw money from a cash ISA! You'll immediately lose all the tax benefits."

Highly misleading for anyone still spouting that mantra of never take money out of an ISA as it isn't correct any more.

It might have been more valid when the limit was £5k but even less relevant for the vast majority now the limit is over £15k.

Far better to get the highest return you can for the amount of savings you have - at the moment this is current accounts not ISAs.

You'll get 5% with TSB and Nationwide up to £4500 so those would be worth using next.

enthusiasticsaver

Now the isa limit is so much higher there is no issue with withdrawing money and putting it somewhere else. You could get better interest with a current account or a regular saver.

D_S_P

The problem with the current accounts is the minimum monthly income into the account. So am i right in thinking that as long as the minimum goes in each month say £500 for TSB, I could just set a standing order for the £500 to come back out again a day later into my main current account?

The other problem is that after a year and a bit I would reach the limit for interest in the TSB account and then would have to open another one with someone else, so i would just have lots of current accounts that I would need to put a minimum income into every month.

puk999

D_S_P wrote: »

The problem with the current accounts is the minimum monthly income into the account. So am i right in thinking that as long as the minimum goes in each month say £500 for TSB, I could just set a standing order for the £500 to come back out again a day later into my main current account?

No need to wait a day to take the money out again. The money only need touch the account and can come back out immediately. Standing orders are fine for this. I also do some manually.

The other problem is that after a year and a bit I would reach the limit for interest in the TSB account and then would have to open another one with someone else, so i would just have lots of current accounts that I would need to put a minimum income into every month.

So you have £1500 total in your ISAs, or £1500 roughly in each of them? It's not much work (IMHO) to open another account elsewhere when the TSB one is full. Might as well get your hard earned money working for you as best as possible!

How long term are your savings? If you have a far horizon (e.g. 10 years and more) then you should consider S&S ISAs as being in the market beats cash over long terms. Only do this once you have an emergency cash fund built up.

jimjames

Once you get over £4500 with TSB and Nationwide you can then look at Lloyds with their 4% account. Tesco have 3% on £3000 too.

Plenty of options that will keep you going up to around £50,000 if you need that much cash. If not then look at S&S ISA options as above.

D_S_P

Its basically my pension savings so im looking very long term and I have £1500 ish in each of my ISA's as i just opened a new ISA with a better interest rate each year. Never actually looked at S&S ISA's before.

I thought TSB and Nationwide were £2000 and £2500 limits respectively.

Im not very money savy as you can tell and the idea of having 6+ current accounts all needing £1000 a month incomes to manage and then finding new accounts for all of these when the interest rate drops is a bit scary.

Thanks for you help

puk999

Is this your only pension provision? Inflation will eat away at the cash over time; the purchasing power of the cash will be weakened as prices of goods/services increase. Do you have a pension at work?

I hold some cash in current accounts for my emergency fund (e.g. in case I was made redundant) and short term saving (e.g. house maintenance, holiday, replacement car).

For retirement, I'm using SIPPs and S&S ISAs. With a bit of research, you'll hopefully find these aren't that daunting. There's loads of people willing to help on here.

Maybe start with the TSB and Nationwide FlexDirect (you're correct: they are £2k and £2.5k respectively)? Hopefully you'll find these current accounts manageable and consider expanding from there. While this is happening, you can do some research into pensions and S&S ISAs?

EDIT: If you're really not up to the TSB, Nationwide FlexDirect, Club Lloyds, etc, then there's Santander 123 which'll give you 3% on your cash between £3k and £20k. I don't hold one myself so don't know it inside-out. There's a small account fee, but the account gives you cashback on certain payments which'll probably more than pay for the account. There are direct debit requirements on the account. As I said, this account doesn't give you the top interest, but might be less hassle as you will be controlling just the one account?

badger09

From your opening post, I gather you want to keep it simple

It appears the Club Lloyds is a joint account. You & your husband/wife can also have one each - so that would be a home for £15000 @ 4%. You can also both have a Club Lloyds monthly saver - 4% on another £400 x per month.

If that's not enough room for your savings, then either a Santander 123 for the cashback and 3% interest over £3k or a wide variety of others

Simply set up SOs to shuffle the minimum monthly funding between them

D_S_P

Yes this is my only pension work for a small company so probably wont have the option for a work place pension for another few years.

Had a quick look at S&S ISA's and SIPPS but they do look daunting, whats more daunting than potentially losing all your money! Ill have to do more research on them

ikorodu

D_S_P wrote: »

Yes this is my only pension work for a small company so probably wont have the option for a work place pension for another few years.

Had a quick look at S&S ISA's and SIPPS but they do look daunting, whats more daunting than potentially losing all your money! Ill have to do more research on them

If this is your only pension then I'd definitely be looking at a SIPP. First you'd need to give an idea of how much you've got in total in all your isas. If I understand this right, you can pay in any amount up to your total earnings in a year (to a max of £40k). The real benefit you'd get would be the tax back. So say you have £8k in your isas and you pay it into a SIPP you'd be given an extra £2k by the tax man, giving you £10k in you pension.

How old are you? You can now access your SIPP from age.