Best savings that you can access

financegirl

I have 6k in my current account and plan to save £400 per month till next August. I'm hoping to have £10k by next August...which I'll then be spending.

So where's the best place to stick the 6k for 9 months - presume ISA wouldn't be the best option as it won't sit in there for a year.

I also need a good reg saver that won't penalise you if you also don't leave it in there for a year.

Thanks in advance

finance girl

Aegis

If you're not going to use your ISA allowance this year you may as well stick £3k into a NS&I Direct ISA to take advantage of the tax-free savings in the short term (you'll be paid interest in April or on closure). The rest you could stick into ICICI, Icesave or Sainsburys accounts, as all of these offer 6.3% AER or more.

I'm not familiar with regular savers, so can't really help you there.

financegirl

aegis,

is it worth opening an isa now even though i need to access the money in august. it obviously won't be in there for a year - how much impact does this have on the interest.

dzug

financegirl wrote: »

aegis,

is it worth opening an isa now even though i need to access the money in august. it obviously won't be in there for a year - how much impact does this have on the interest.

The same impact as it would have on the interest in just about any account - you only get paid interest for the time it's in the account.

Aegis

dzug wrote: »

The same impact as it would have on the interest in just about any account - you only get paid interest for the time it's in the account.

Exactly

caliston

financegirl, interest is usually calculated daily but paid annually. So the bank says they pay you 6.3% per year but they actually work it out at a rate of (say) 0.0167% per day. Since 0.0167% of a few thousand isn't very much and they can't pay fractions of a penny, they usually wait for a certain date (either once a month or once a year, often in March or early April) before paying it to you. But the interest is still yours - if you close the account you get all of it that's due to you. If you take money out but don't close the account the interest will be paid whenever the interest payment is normally due.

There's nothing particularly special about ISAs in this respect... the only difference is that once you've withdrawn money from an ISA you can't put it back (unless you haven't used some of your annual allowance). If you're not going to hit your paying in limit it's quite sensible to use an ISA as a general-purpose savings account, paying in and out as you like.

financegirl

I'm really sorry to sound dumb but am still confused.

If i put 3k of the 6k in an ISA is it the case that I will only get interest on that 3k until the day I pull it out (which will be next august). WHat about ISAs called fixed rates that won't let you take out withdrawals..should I be looking for an ISA that will let you do a withdrawal...there's no point me putting my money into an ISA that won;t let you do any withdrawals..what would happen in you pulled the money out before the bond matures, would you get nothing?

For the remaining 3k in my current account I was thinking about putting that in the post office reg saver account - 6% and they let you have 6 withdrawals a year. Was also thinking about saving my 400 quid a month into that cos the saver I looked at with britannia at 7.25% won't let you make any withdrawals for a year...

Basically I need to find good accounts that let you make withdrawals throughout they year but still pay a decent rate. I'd prefer ones that I can access in branches not internet based ones.