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Is this sensible: better to borrow for 6 months than withdraw my ISA savings...
djm1972
Posts: 389 Forumite
in Credit cards
I owe Alistair Darling £7500 by the 31st Jan next month :eek:
Now, I have 2 years worth of mini cash ISA savings (~ £6200 increasing by about £30 per month), and I have around £1500 surplus each month so actually paying my tax bill isn't a problem.
However, as you probably know, once you withdraw from an ISA that's it - it's a tax free savings entitlement that can never be recovered.
On that basis, I just logged into my Egg Card account and they are offering 3.9% until 1st July 2008 (2.5% fee @ 16.9%). For various reasons I don't really want to apply for a new card and get 0% for 6 months.
By my calculations, if I use a balance transfer from my Egg Card to my current account in order to pay my tax bill, and pay that back at £1500 / month for the 6 months; after offsetting interest earned on my ISA the whole exercise will cost me about £110.
I think that is a relatively small price to pay in order to keep 2 years ISA allowance, that could generate substantial income over the next few years provided that I do not need it for any reason. Does that sound sensible?
Now, I have 2 years worth of mini cash ISA savings (~ £6200 increasing by about £30 per month), and I have around £1500 surplus each month so actually paying my tax bill isn't a problem.
However, as you probably know, once you withdraw from an ISA that's it - it's a tax free savings entitlement that can never be recovered.
On that basis, I just logged into my Egg Card account and they are offering 3.9% until 1st July 2008 (2.5% fee @ 16.9%). For various reasons I don't really want to apply for a new card and get 0% for 6 months.
By my calculations, if I use a balance transfer from my Egg Card to my current account in order to pay my tax bill, and pay that back at £1500 / month for the 6 months; after offsetting interest earned on my ISA the whole exercise will cost me about £110.
I think that is a relatively small price to pay in order to keep 2 years ISA allowance, that could generate substantial income over the next few years provided that I do not need it for any reason. Does that sound sensible?
0
Comments
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Defo do the Egg option... 3.9% I imagine is the annual rate (should be as I don't think they're allowed to advertise it in any other way)... effective until July 08 according to ur offer. Just make sure this 3.9% is defo the per annum rate and Egg allow you to do money transfers into your bank account at this rate (i.e. that rate is not just for BT's only... which it may well be!!!).
If all the above is okay... the reason it makes more sense to take the money from Egg is bcos your ISA is probably paying out over 6% interest... so it makes more sense to take the money from Egg. (i.e. bcos the money you will in interest if you took out money from your ISA (6% p.a.) is more than the money you would be paying Egg back in interest (3.9% p.a.)).0 -
If you've got the money in your ISA then there's no point on taking out borrowing and paying interest on it unless it's on a 0% offer.0
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