New to saving - ISA question

jess444_2

Hi all,
I have been looking for a cash ISA to begin saving. The National Saving Direct ISA looks good at 6.3 AER. My question is if I deposit £3000 pound now can I deposit another £3000 after April 6th - or will I have to open another ISA. Sorry if this is a stupid queston but were money is concerned sometimes I'm not too bright. :rolleyes:

jem16

jess444 wrote: »

Hi all,
I have been looking for a cash ISA to begin saving. The National Saving Direct ISA looks good at 6.3 AER. My question is if I deposit £3000 pound now can I deposit another £3000 after April 6th - or will I have to open another ISA. Sorry if this is a stupid queston but were money is concerned sometimes I'm not too bright. :rolleyes:

Yes you can do this although it will be £3600 from 6th April 2008. Whether or not you want to do this will depend on the rate being offered at the time.

Mikeyorks

...... but you might consider putting it towards your debt (per signature) first? If that's costing you more in % terms than the ISA rate and there are no early redemption fees.

jess444_2

Hi,
Thanks for your replies. You are right about the debt Mickeyorks. I am saving in order to pay off a loan that does not allow overpayments. Plan is to save enough to pay it off in full.

egamar

jess444 wrote: »

Hi,
Thanks for your replies. You are right about the debt Mickeyorks. I am saving in order to pay off a loan that does not allow overpayments. Plan is to save enough to pay it off in full.

Crikey! Is it legal to disallow repayment of partial capital amounts from time to time? That's a new one on me, but it might be very common for all I know. I'd have thought there was some p[rovision in consumer legislation to make that an 'unfair contract term' or similar. If you haven't checked with the CAB or something similar, I'd think about doing so, but you probably have.

Just for the sake of clarity: you can have one ISA each tax year, into which you can put up to the allowed sum (mini/maxi) until the end of the tax year. Then your money can grow inside each ISA, but you can't put ion any more after the "closing date".

jem16

egamar wrote: »

Just for the sake of clarity: you can have one ISA each tax year, into which you can put up to the allowed sum (mini/maxi) until the end of the tax year. Then your money can grow inside each ISA, but you can't put ion any more after the "closing date".

What "closing date"???

You have a tax-free allowance each year. You can either add to an existing ISA or you can open a new ISA.

jess444_2

Thanks for replies,
Egama, loan is with Tesco's - was told could not overpay. I thought that this was quite common.
Jem16, I think you are saying that I could save £3000 in an Isa in this finacial year, and then after April could add another £3000. Is this right.

jem16

jess444 wrote: »

Jem16, I think you are saying that I could save £3000 in an Isa in this finacial year, and then after April could add another £3000. Is this right.

Yes I am. You can put £3000 into a cash ISA now. Then on April 6th 2008 you have a brand new allowance only it is going up to £3600.

egamar

jem16 wrote: »

What "closing date"???

You have a tax-free allowance each year. You can either add to an existing ISA or you can open a new ISA.

I was trying to keep things simple with my 'closing date' reference, but to address your specific point ....


Emmmm. I might be wrong, and it might just be the way I have been doing it, but my understanding is that you have to open a new ISA account every year. The last date you can put money into the e.g. 07/08 ISA is April 5th, if you want to put 3k into an ISA on April 6th 2008 you'll have to open a new ISA account for 08/09, you can't put the 3k into the 07/08 account.

Of course, some institutions might "hide" that from the investor and just talk about the annual allowance and present each separate year's ISA account as a single account to the customer*, but the underlying mechanism would be as I've described. Or not.

I don't have any cash ISAs, only funds in 'maxi' ISAs and the way FundsNetwork works is that each year you open a new ISA account for that year into which you can put upto £7k's worth of funds.

*Good marketing: keeps the customer less aware that they can simply go to another bank and put £3k in that bank's ISA if they think they're just got the one ISA account with the first bank, that's all they're allowed, and all they can do is top it up every year!

egamar

jess444 wrote: »

Thanks for replies,
Egama, loan is with Tesco's - was told could not overpay. I thought that this was quite common.

It might be, but I've never looked at Tesco as one of the big "gougers" in the market place, I always thought of them as relatively benign: perhaps I am wrong!

I wonder if it's worth talking to them again and see if they will accept a lumpsum payoff of the capital rather than a small monthly increment in repayment.

I expect there'll be something buried in the small print somewhere if you can find your magnifying glass: I'd rather read what was written than listen to what a call centre drone thinks is right!

jem16

egamar wrote: »

I was trying to keep things simple with my 'closing date' reference, but to address your specific point ....


Emmmm. I might be wrong, and it might just be the way I have been doing it, but my understanding is that you have to open a new ISA account every year.

You are wrong I'm afraid. When you open a cash ISA the application form states that you are opening an ISA for tax year 07/08(for example) and each tax year thereafter. Your cash ISA remains open until you close it.

The last date you can put money into the e.g. 07/08 ISA is April 5th, if you want to put 3k into an ISA on April 6th 2008 you'll have to open a new ISA account for 08/09, you can't put the 3k into the 07/08 account.

No you don't. If you want to keep your exisitng ISA because you are happy with the rate you simply deposit more money in the new tax year. Once you have done that you are then "subscribed" to that ISA and cannot open another one elsewhere.

You can of course open a completely new one elsewhere if you wish.

I don't have any cash ISAs, only funds in 'maxi' ISAs and the way FundsNetwork works is that each year you open a new ISA account for that year into which you can put upto £7k's worth of funds.

Cash ISAs work completely differently to S&S ISA. You are correct in what you describe re S&S ISA but not cash ISAs.