Withdraw from ISA to savings?

timmah86

Hi all.
I have about 20k in Savings - 12.5k in a Nationwide ISA earning a paltry 0.03% and 7.5k in Atom bank earning 0.5%.
I'm 34, a higher rate tax payer, no debt other than the mortgage, good pension scheme.
Given the terrible ISA interest rate, should I withdraw the 12.5k and put it in the Atom savings? Or stick all 20k in premium bonds? I'm probably looking to save for a couple of years then buy a second house so not looking for really long term investments.
Thanks for the advice!
T

Albermarle

There is no need to hold savings in an ISA , unless they are a large amount . You can earn up to £500 interest tax free as a higher rate taxpayer. If you had a fixed term savings account you would get a better rate ( not a lot though nowadays, maybe 1 %) PB's pay on average about 0.8% plus a VERY small chance of a big prize. 

2010

What`s wrong with paying off your debt. ie: mortgage?
But obviously keeping some for a rainy day.

timmah86

Albermarle said:

There is no need to hold savings in an ISA , unless they are a large amount . You can earn up to £500 interest tax free as a higher rate taxpayer. If you had a fixed term savings account you would get a better rate ( not a lot though nowadays, maybe 1 %) PB's pay on average about 0.8% plus a VERY small chance of a big prize. 

That's great. Thanks for the advice.
2010 said:

What`s wrong with paying off your debt. ie: mortgage?
But obviously keeping some for a rainy day.

20k would hardly make a dent! I went for as big a mortgage as I could comfortably afford at the time. Plus I want to keep the money relatively available as I'm planning to either convert the loft and/or buy a second property over the next few years.

labp04

Just a thought. Given that HMGov is likely to review taxes in March and that any cash you hold in your ISA will most likely continue to be protected, I wonder if it makes some sense to wait and see what is decided in their infinite wisdom and then make any changes you fancy?

happybagger

That's interesting, as with a lot of ways we're going to have to pay for the government's response to coronavirus, taxes will clearly have to rise to pay for the economic destruction. I'm not so sure taxing savings income will be high on the list, as the tax take on it would be minimal really, with interest rates close to zero.

Different matter 10 years+ ago but now?

That said, I always make sure I use my ISA allowance.

db3745

With current interest rates not likely to change in the short term I decided to put a spare £14k which I might need access to in a few months to a year, in Premium Bonds. I couldn't face setting up in my experience very complicated log-in/access systems (Coventry BS for instance, Union Bank of India (different but no easier to follow)) for the sake of less than £100 interest. I was lucky enough to win £25 in the 1st draw in December, and I'm not bothered if I win nothing else. I really didn't want to lose my Cash ISA wrapper when my last ones matured in May 2020, but only because you can convert it/them to Stocks and Shares in future years. You're at the opposite end of the age scale to me. If you can see the prospect of being able to build a portfolio sometime in the future you could always take the low Cash ISA rates for now, but sounds like you want to invest in bricks and mortar.

colsten

happybagger said:

That said, I always make sure I use my ISA allowance.

You should have a lot more than £12.5K in an ISA then. But as already commented, with £20k it's hardly worth bothering with an ISA for short term savings.

With a little extra effort, you could probably swiftly feed £20k into Regular Savers, paying up to 1.5% AER. The interest from those would still not get you over the personal savings allowance.

happybagger

colsten said:

happybagger said:

That said, I always make sure I use my ISA allowance.

You should have a lot more than £12.5K in an ISA then. 

Last time I checked I had a LOT more than that in ISAs. Where did you get that idea from?

Dazed_and_C0nfused

happybagger said:

colsten said:

happybagger said:

That said, I always make sure I use my ISA allowance.

You should have a lot more than £12.5K in an ISA then. 

Last time I checked I had a LOT more than that in ISAs. Where did you get that idea from?

I think there was a mix-up between you and the op, who said this in their op,

I have about 20k in Savings - 12.5k in a Nationwide ISA earning a paltry 0.03% 

happybagger

Good point. 
I'd been posting on another thread about transferring my ISAs and thought I'd said something there, not spotted the op's figure. Ta