ISA vs Regular saver

Daniel86

Hello, I'm not sure what to do with my savings, my Newcastle big home ISA has cut the interest rate again down to 2.02%(inc bonus).
So I'm thinking of transferring the money from my ISA to a Santander 1-2-3 current account, which would give me 2.4% interest after tax. Is it as simple as 2.02% vs 2.4%? I'm guessing there is more to it. Can anyone advise?
I would also like to open up a help to buy ISA when they are launched, so I can't debit into my current ISA this tax year and with the interest allowance supposedly coming next April, should I just ditch my current ISA altogether?

Many thanks!

droopsnoot

The key things with cash ISAs is the contribution limit - you can only put a certain amount of money in for each tax year, and once the tax year ends you've lost that opportunity. So if you have £1000 in a cash ISA and want to shift it somewhere for more interest, and you're unlikely to be maxing out your ISA contributions every year in any case, then losing the ISA 'status' of that cash probably won't matter. If you've got a lot more in there, then it might be a pity to lose the status.

But then if you've got £1000 in there, is it worth the hassle of moving to get £24 instead of £20.20 per annum? Only you can decide on that one. But for me, moving cash out of a cash ISA carries the disadvantage of losing the tax-free status of that money, which can never be recovered.

jimjames

droopsnoot wrote: »

But then if you've got £1000 in there, is it worth the hassle of moving to get £24 instead of £20.20 per annum? Only you can decide on that one. But for me, moving cash out of a cash ISA carries the disadvantage of losing the tax-free status of that money, which can never be recovered.

If you have £1000 then you can get £125 per year before tax outside an ISA using current accounts. Or £20 inside an ISA.

I know which I'd choose.

Daniel86

jimjames wrote: »

If you have £1000 then you can get £125 per year before tax outside an ISA using current accounts. Or £20 inside an ISA.

I know which I'd choose.

Do you mean the first £125 of interest earned is tax free?

jimjames

Daniel86 wrote: »

Do you mean the first £125 of interest earned is tax free?

No, well not until next year anyway.

You have to pay tax on it but even after tax it's much more than £20

etienneg

jimjames wrote: »

If you have £1000 then you can get £125 per year before tax outside an ISA using current accounts. Or £20 inside an ISA.

I know which I'd choose.

£125 return on £1000 is 12.5%. Where can you get this rate with current accounts? Or are you including some sort of one-off switching bonus?

jimjames

etienneg wrote: »

£125 return on £1000 is 12.5%. Where can you get this rate with current accounts? Or are you including some sort of one-off switching bonus?

It does indeed equate to 12.5% and isn't one off switch bonus so that would increase it more.

Tsb account at 5% for £1000 and Halifax account at £75pa by passing £750 through the account each month.

Total £125. Obviously the % drops with bigger balances.

droopsnoot

jimjames wrote: »

If you have £1000 then you can get £125 per year before tax outside an ISA using current accounts. Or £20 inside an ISA.

I know which I'd choose.

Fair point, I was really comparing the figures from the OPs ISA and proposed current account.