ISA Silly question

quietness

Sorry if this is a silly question but here goes.
I paid into an ISA last year and want to do so again this year, I will be staying with the same provider so my question is, Do I just keep paying into the old ISA account or do I have to open a new ISA account for this years money?

unimaginative_user_name

It depends on the terms and conditions of your ISA. If it's a fixed term account you would more than likely have to open a new ISA as there is a time limit for deposits. If it's an instant access ISA you could deposit this tax year's money into the same account but check that the rate hasn't dropped and that it is still the best product for you. There are a number of current accounts that pay a better rate even after tax (TSB, Lloyds, Santander ...) so they might be worth looking at.

quietness

Thanks for the reply.

Magsnoodle

HI

Nationwide last year paid over 2% (possibly 2.5%) and this account from April 1st has dropped to 1.25%. Their new regular savers ISA is 2% so we have opened a new one for this year....

Hope that helps. I would check what rate your old ISA was before paying money in.

TTFN x

colsten

Magsnoodle wrote: »

Their new regular savers ISA is 2% so we have opened a new one for this year....

Why settle for a 2% regular savings ISA when you can get non-ISA regular savings accounts paying 4 and 6%?

SeduLOUs

colsten wrote: »

Why settle for a 2% regular savings ISA when you can get non-ISA regular savings accounts paying 4 and 6%?

Because the tax protection will be there for as long as the savings exist.

It's more often than not a no brainer to stick small amounts of short term savings into a high paying current account, but the current accounts are usually only good for up to around £20k - if you have a bigger pot and/or plan on holding onto the savings for a long time an ISA isn't a terrible idea.

colsten

SeduLOUs wrote: »

Because the tax protection will be there for as long as the savings exist.

It's more often than not a no brainer to stick small amounts of short term savings into a high paying current account, but the current accounts are usually only good for up to around £20k - if you have a bigger pot and/or plan on holding onto the savings for a long time an ISA isn't a terrible idea.

You can put £50K into interest paying current accounts if you want to (and if you have a decent credit record, which, as a saver with lots of £££, you should have). You can also put something like £1,600 a month into 4 and 6% regular savings accounts.

You can drop most/all of that into an ISA until April 5 2016 - so plenty of time to earn some decent interest before you commit your money into any ISA.

Holding savings "for a long time" (5+ years) in a cash ISA is a terrible idea.

Holding savings for less than 5 years in a cash ISA is also a terrible idea.

So, essentially, a cash ISA is a terrible idea. The only exception I would make is perhaps the HTB ISA for prospective first time buyers but it isn't with us yet, and who knows whether it ever will be.

bigfreddiel

If you're planning on investing rather than saving, then an equity isa is the only way to go.

Cheers fj