Which will give me the best return

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I have £6500 in a cash ISA paying a measly 1% PA. Or I am looking at a Lloyds Bank Monthly saver that pays 4% PA.

It seems like a no brainer, however I cannot put a lump sum in the Monthly Saver, I can put a max of £400 per month. Now £400 pm for 12 months is £4800

so my question is this.

Will I earn more interest pa in a cash ISA of £6500 or will I get more interest putting £400 pm in a monthly saver for 12 months (total £4800 paid in)?

Thanks

S

Comments

  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    Why not open a Club current account at Lloyds? It pays 4%p.a. on a balance in the band £4k-£5k.
    Free the dunston one next time too.
  • SalarySlave
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    £6500 @1% for 12 months gives £65 interest
    £4800 @ 4% with only £400/month gives you £96

    You can drip feed it £400 a month whilst leaving it in the 1% account or even better move it to higher paying accounts. Nationwide is offering 5% on £2500 Current account That's £125 interest per year
    It also comes with a Regular saver at 5% with which £500 can be paid in a month. So that is another £150 interest.
    That will take care of more than you have got, incase you come into some more money.

    You do have certain requirements to get the nationwide account, direct debits and £1000 paid in each month, but there is tons of information on here how to set up free direct debits and move money back and forth between accounts
  • Suarez
    Suarez Posts: 970 Forumite
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    If you moved the money to a regular saver you will earn £122 after a year.

    Leaving the £6500 in the ISA gets you £65.
  • sjp1966
    sjp1966 Posts: 84 Forumite
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    Thanks both for the response. This gives me a better idea of what I need to do.
  • badger09
    badger09 Posts: 11,247 Forumite
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    kidmugsy wrote: »
    Why not open a Club current account at Lloyds? It pays 4%p.a. on a balance in the band £4k-£5k.

    A Club Lloyds current account is needed in order to access the Monthly Saver. So presumably OP already has one?
  • N1AK
    N1AK Posts: 2,903 Forumite
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    sjp1966 wrote: »
    I have £6500 in a cash ISA paying a measly 1% PA. Or I am looking at a Lloyds Bank Monthly saver that pays 4% PA.
    Will I earn more interest pa in a cash ISA of £6500 or will I get more interest putting £400 pm in a monthly saver for 12 months (total £4800 paid in)?

    You could gradually transition money out of the ISA into the monthly saver and that would earn you more interest than leaving it in the ISA in the short term.

    If you're not currently paying at least 40% income tax then the only good reason to be keeping money in a cash ISA is your judgement of the potential future tax benefits of doing so.

    I say the above as someone who isn't a 40%+ rate payer who has money in Cash ISAs. I'm inclined to the view that if you're never going to be a high rate tax payer (not always an easy thing to know) and are never going to have hundreds of thousands of pounds invested outside of property/pensions then ISAs are of very limited value.
    Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...
  • sjp1966
    sjp1966 Posts: 84 Forumite
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    N1AK wrote: »
    You could gradually transition money out of the ISA into the monthly saver and that would earn you more interest than leaving it in the ISA in the short term.

    If you're not currently paying at least 40% income tax then the only good reason to be keeping money in a cash ISA is your judgement of the potential future tax benefits of doing so.

    I say the above as someone who isn't a 40%+ rate payer who has money in Cash ISAs. I'm inclined to the view that if you're never going to be a high rate tax payer (not always an easy thing to know) and are never going to have hundreds of thousands of pounds invested outside of property/pensions then ISAs are of very limited value.

    I have just been lazy with it, I think the interest was OK when I opened it but couldn't be arsed to move it. I doubt ill ever be a high tax bracket person so ill move it out I think.

    I could trickle feed it out as you mention, or take the lot out and drop 400 a month into that Lloyds Monthly Saver when my current one expires and use the rest somewhere else. I've been looking at that Nutmeg website, it seems interesting.
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