Will a 20 K investment be more profitable in a 0.9% cash ISA or a 1.16% Income bonds account?

chris112

As the income bonds account will also not be liable for tax (As I won't earn enough profit to be taxable), which account would be more financially beneficial for me?
 How do I make this calculation?

Or does anyone have a suggestion for a more lucrative way of saving this money? But I don't want to do a fixed rate or any form of commitment as I may need access to the money, in the unlikely event
Thank you

wmb194

If tax isn't an issue then simply plump for the higher rate. 

You can earn a better rate than these with regular savers and some, like BoS' 1.5% and Lloyds' 1.5% and 2% accounts, have fixed rates for a year and are instant access but of course the amount you can deposit every month is restricted, normally to about £250. They take more effort to set up and operate, though, and some need an associated current account.

kinger101

With average luck, premium bonds might be better.  But no point in wrapping in an ISA if the interest isn't going to be taxable now (or the near future).

nbrewitt

I be tempted to go 10K in Premium Bonds and 10K Income Bonds, forget the ISA if you're not going to breach the 1K interest threshold

happy_hazelnuts

if you seriously do not know which is better - a 0.9% account or a 1.15% account then you could spend a bit of the 20k on a maths course it might help you in the future.

grumiofoundation

chris112 said:

As the income bonds account will also not be liable for tax (As I won't earn enough profit to be taxable), which account would be more financially beneficial for me?
 How do I make this calculation?

Or does anyone have a suggestion for a more lucrative way of saving this money? But I don't want to do a fixed rate or any form of commitment as I may need access to the money, in the unlikely event
Thank you

If you do not pay any tax then the calculation is 

What is bigger 1.16 or 0.9?

There aren't really many ways of guaranteeing a higher interest without locking money up for a period of time. Depending on which accounts you are eligible for can get slightly higher interest rates using regular savers, some of which are easy access. 

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/#opentable

rs567

Sorry to hijack your thread Chris 112, but I think I'm looking at virtually the same thing as you.

I have about 40,000 in a Nationwide ISA which has dived to 0.25 and its time to move. I have looked at the 1% NS&I ISA and the 1.15% Income Bonds. (I think at 52 I'm a bit too old to take out a Lifetime ISA!)

A couple of questions: 1) What is the likely difference of having an account that pays interest out monthly and one that pays yearly?

2) To change to ISA is merely a transfer request, but to transfer to the Income Bonds (which I've already opened with £500 min payment), do I just move all the £40000 to my Nationwide Flex Current and then to my NS&I Income Bonds? How else is it done?

Many thanks for all your help. (P.S. comments about splitting to Premium Bonds also noted and under consideration)

badger09

rs567 said:

Sorry to hijack your thread Chris 112, but I think I'm looking at virtually the same thing as you.

I have about 40,000 in a Nationwide ISA which has dived to 0.25 and its time to move. I have looked at the 1% NS&I ISA and the 1.15% Income Bonds. (I think at 52 I'm a bit too old to take out a Lifetime ISA!)

A couple of questions: 1) What is the likely difference of having an account that pays interest out monthly and one that pays yearly?

2) To change to ISA is merely a transfer request, but to transfer to the Income Bonds (which I've already opened with £500 min payment), do I just move all the £40000 to my Nationwide Flex Current and then to my NS&I Income Bonds? How else is it done?

Many thanks for all your help. (P.S. comments about splitting to Premium Bonds also noted and under consideration)

1) the difference is that when interest is paid out of the account every month - as with Income Bonds -  you'll have to put it somewhere else if you want it to earn interest on that interest . You could have it paid into NS&I Direct Saver if you want to keep it simple.
2) yes - just transfer the cash in your ISA to your current account and pay into Income Bonds from there.