Help With Savings Interest

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I’m not very good at sums and I’m hoping someone can help.:)
A saver has £7800 an easy Access ISA paying 1.51% yearly.
The saver is able to make a regular saving of £200 a month.
Will the saver earn more interest by saving the £200 into a regular saving account at 5% for a year
Or saving it into the existing ISA?
Thank you in advance.

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  • HappyMJ
    HappyMJ Posts: 21,115 Forumite
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    MeterMaid wrote: »
    I’m not very good at sums and I’m hoping someone can help.:)
    A saver has £7800 an easy Access ISA paying 1.51% yearly.
    The saver is able to make a regular saving of £200 a month.
    Will the saver earn more interest by saving the £200 into a regular saving account at 5% for a year
    Or saving it into the existing ISA?
    Thank you in advance.

    5% is more than 1.51%.

    Interest is just about always calculated daily so all that matters is the interest rate is as high as you can get it.

    There are accounts that pay 6% and you can keep the money in current accounts earning 3% whilst waiting for it to be transferred into regular saver accounts.

    As long as you are a basic rate taxpayer you can earn £1,000 interest this year free of any tax which pays more than saving in ISA's. I would take the money out of the ISA and get it earning more money.

    If at some point ISA rates start to exceed current account interest rates you can put it back but for the moment I would not be considering Cash ISA's.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • xylophone
    xylophone Posts: 44,585 Forumite
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    The £7800 would fit into 1 TSB plus, 1 Nationwide Flexdirect and 1 Lloyds Club if you are accepted for these accounts - you could save the £200 a month in the Flex monthly saver.

    If you were accepted for the First Direct current account you could access their monthly saver.

    More simply, a couple of Tesco current accounts and a TSB Plus with SO for the same day for £500 between Tesco 1 and TSB and back again, interest from TSB and Tesco 1 to Tesco 2 and the £200 saved into a TSB monthly saver.

    There are various permutations available depending on which accounts you can open - you need to check the terms and conditions concerning any DDs required and monthly deposit amounts etc.....

    http://forums.moneysavingexpert.com/showthread.php?t=5005862 - a very long thread.......
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