We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Which gives me better interest - My LISA or HTB?
bp5678
Posts: 413 Forumite
Right now I have £4,999.69 in my Skipton LISA (so basically almost £5k):
- 1.00% tax-free pa/AER. Interest is earned daily and paid on the anniversary of account opening.
- I put in £4k last tax year
- I got the £1k bonus
Right now I have £4,253 in my Nationwide HTB:
- Offers 2.50% AER/tax-free (variable)
- I add £200 into this at the end of each month
At some point I'm going to move my HTB money into my LISA. Once this happens I'll have £9,252.69 in my LISA.
The idea of having both accounts was I could get better interest in my HTB, however I think I may get better interest in my LISA now due to the compound interest effect (especially if I move the HTB money in there meaning I have £9,252.69 in total). Which would give me more interest?
- 1.00% tax-free pa/AER. Interest is earned daily and paid on the anniversary of account opening.
- I put in £4k last tax year
- I got the £1k bonus
Right now I have £4,253 in my Nationwide HTB:
- Offers 2.50% AER/tax-free (variable)
- I add £200 into this at the end of each month
At some point I'm going to move my HTB money into my LISA. Once this happens I'll have £9,252.69 in my LISA.
The idea of having both accounts was I could get better interest in my HTB, however I think I may get better interest in my LISA now due to the compound interest effect (especially if I move the HTB money in there meaning I have £9,252.69 in total). Which would give me more interest?
0
Comments
-
You will earn more interest in the 2.5% account because the interest rate is higher than on the 1% account. The AER already accounts for the effect of compounding (or not).
You will also lose the HTB ISA benefits if you transfer the money out.urs sinserly,
~~joosy jeezus~~0 -
Assuming you're not planning to keep money in the LISA until retirement and will use it towards your first property purchase, then the question is really when, rather than if, to move the money over from HTB.
In these circumstances, your best bet would be to leave the money in the HTB and to transfer £4K to the LISA towards the end of the tax year. This would earn the 2.5% on it for now (obviously better than 1%) but still gain the benefit of the 25% bonus once the money is in the LISA. Likewise, the savings that you continue to accumulate in the HTB (over and above the £4K you move in March 2020) should be moved to the LISA late in the 2020/21 tax year, unless you buy before then.
The best buy cash LISA is now the 1.4% available from Moneybox, so consider transferring from Skipton to there....0 -
Thanks. The money is only in the HTB for the better interest. Although I'm a bit confused but it all in all honesty!!JuicyJesus wrote: »You will earn more interest in the 2.5% account because the interest rate is higher than on the 1% account. The AER already accounts for the effect of compounding (or not).
You will also lose the HTB ISA benefits if you transfer the money out.
Would I get better interest if I moved this HTB money to my Marcus account (and then transfer it to my LISA just before the tax year ends)? My Marcus account currently has £11k in there.0 -
JuicyJesus wrote: »You will earn more interest in the 2.5% account because the interest rate is higher than on the 1% account. The AER already accounts for the effect of compounding (or not).
You will also lose the HTB ISA benefits if you transfer the money out.Assuming you're not planning to keep money in the LISA until retirement and will use it towards your first property purchase, then the question is really when, rather than if, to move the money over from HTB.
In these circumstances, your best bet would be to leave the money in the HTB and to transfer £4K to the LISA towards the end of the tax year. This would earn the 2.5% on it for now (obviously better than 1%) but still gain the benefit of the 25% bonus once the money is in the LISA. Likewise, the savings that you continue to accumulate in the HTB (over and above the £4K you move in March 2020) should be moved to the LISA late in the 2020/21 tax year, unless you buy before then.
The best buy cash LISA is now the 1.4% available from Moneybox, so consider transferring from Skipton to there....
Thank you. Yes for a house. As you say I'll definitely move the money from my HTB to LISA - just trying to work out when to maximise interest. Thanks for letting me know about Moneybox. Is it relivately easy to just transfer from one LISA to another? I presume there’s no penalties/problems in doing this?0 -
No, your HTB pays 2.5% and Marcus pays 1.5%, it's really as simple as that!Would I get better interest if I moved this HTB money to my Marcus account (and then transfer it to my LISA just before the tax year ends)?
There's no reason that I'm aware of to expect any problems, just follow the process at https://www.moneyboxapp.com/faqs/lisa/transfer-lifetime-isa-to-moneybox/ - there are no penalties for doing so as long as you use the receiving provider's ISA transfer process....Thanks for letting me know about Moneybox. Is it relivately easy to just transfer from one LISA to another? I presume there’s no penalties/problems in doing this?0 -
So in that case I might as well move all my money from my Marcus account into my HTB?No, your HTB pays 2.5% and Marcus pays 1.5%, it's really as simple as that!
There's no reason that I'm aware of to expect any problems, just follow the process at https://www.moneyboxapp.com/faqs/lisa/transfer-lifetime-isa-to-moneybox/ - there are no penalties for doing so as long as you use the receiving provider's ISA transfer process....
Cheers0 -
In terms of the relative interest rates then yes, it would be better for your money to be within a 2.5% HTB ISA than a Marcus account at 1.5%.So in that case I might as well move all my money from my Marcus account into my HTB?
However, as you can only fund the HTB at £200 per month, it would take a while to shift £11K in that direction!
It sounds like you should consider other options though, if you're seeking optimal interest on your pot and don't plan to use it for buying for a while - you could put some or all of your Marcus money into accounts that pay better interest, such as regular savers, fixed rate or notice accounts....
https://www.moneysavingexpert.com/savings/which-saving-account/
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/0 -
Sorry hopefully my final question:In terms of the relative interest rates then yes, it would be better for your money to be within a 2.5% HTB ISA than a Marcus account at 1.5%.
However, as you can only fund the HTB at £200 per month, it would take a while to shift £11K in that direction!
It sounds like you should consider other options though, if you're seeking optimal interest on your pot and don't plan to use it for buying for a while - you could put some or all of your Marcus money into accounts that pay better interest, such as regular savers, fixed rate or notice accounts....
https://www.moneysavingexpert.com/savings/which-saving-account/
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
Originally I was going to move my HTB money into my LISA money at the end of the tax year to reap the benefits as well as maximise my interest during this period.
However would it not make more sense to move £4k from my Marucs account into the LISA. The reason being that my Marcus has a lower interest than my HTB. This'll allow the money in my HTB to continue to grow and benefit from better compound interest.0 -
Sorry hopefully my final question:
Originally I was going to move my HTB money into my LISA money at the end of the tax year to reap the benefits as well as maximise my interest during this period.
However would it not make more sense to move £4k from my Marucs account into the LISA. The reason being that my Marcus has a lower interest than my HTB. This'll allow the money in my HTB to continue to grow and benefit from better compound interest.
You can pay into both HTB and LISA but only use one for house purchase (Use LISA). So you would in effect use HTB as a regular saver (£200 pcm). However there are higher interest (5%) regular savers available.
Side note - if you transfer to moneybox (currently in the process of doing, painless so far) you get more interest by paying in at the start of the tax year (1.4% of 5000 > 1.5% of 4000)0 -
Sorry hopefully my final question:
Originally I was going to move my HTB money into my LISA money at the end of the tax year to reap the benefits as well as maximise my interest during this period.
However would it not make more sense to move £4k from my Marucs account into the LISA. The reason being that my Marcus has a lower interest than my HTB. This'll allow the money in my HTB to continue to grow and benefit from better compound interest.
You're best leaving the money in your Marcus account until near the end of the tax year and then moving it into your LISA around March time to get the maximum amount of interest on your 4K.
As already has been said above, you could probably be earning more interest by opening a few regular savers and still have the flexibility of penalty-free withdrawals0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.1K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.2K Work, Benefits & Business
- 600.9K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards