Cash ISA or high interest account ?

A_Aardvarkie

What have people chosen to do while fixed rates are significantly higher than the rates offered for cash ISAs ? Do you mix the two in order to prevent exceeding the PSA or accept the change in tax code to give a higher return despite the tax bill ?

Dazed_and_C0nfused

A_Aardvarkie said:

What have people chosen to do while fixed rates are significantly higher than the rates offered for cash ISAs ? Do you mix the two in order to prevent exceeding the PSA or accept the change in tax code to give a higher return despite the tax bill ?

Not everyone is able to benefit from the PSA and plenty have spare Personal Allowance and savings starter rate (which must be used before the savings nil rate (aka PSA) can be used) so will never get near to paying tax on interest.

Ultimately each person should do what gives them the best return for their personal circumstances.

Taxation of interest isn't a one size fits all anymore by quite some distance!

A_Aardvarkie

Dazed_and_C0nfused said:

A_Aardvarkie said:

What have people chosen to do while fixed rates are significantly higher than the rates offered for cash ISAs ? Do you mix the two in order to prevent exceeding the PSA or accept the change in tax code to give a higher return despite the tax bill ?

Not everyone is able to benefit from the PSA and plenty have spare Personal Allowance and savings starter rate (which must be used before the savings nil rate (aka PSA) can be used) so will never get near to paying tax on interest.

Ultimately each person should do what gives them the best return for their personal circumstances.

Taxation of interest isn't a one size fits all anymore by quite some distance!

Thanks, not everyone is able but there are many that do

Albermarle

A_Aardvarkie said:

What have people chosen to do while fixed rates are significantly higher than the rates offered for cash ISAs ? Do you mix the two in order to prevent exceeding the PSA or accept the change in tax code to give a higher return despite the tax bill ?

Your post is a  bit confusing. You can also have a fixed rate savings inside a cash ISA. Do you mean comparing the same fixed term rates inside and outside a cash ISA?
If you do then some providers rates work out about the same, whether taxed or not. So in that case the ISA is better as you can switch out of fixed terms accounts in an ISA ( with a penalty ) but not outside an ISA. So more flexibility.

PawelK

I am keeping my savings right now in premium bonds, easy access in HSBC and Al Rayan. But I think another two months or so and BoE will call down with rate increases. I am planning to utilise my PSA in the highest paying one year fixed rate account and put the rest in a cash ISA. Of possible will also open one or two regular saving accounts but would need to ensure it will not go over my PSA when added from the expected return on my one year fix.

Any better ideas for no risk saving?

cricidmuslibale

PawelK said:

I am keeping my savings right now in premium bonds, easy access in HSBC and Al Rayan. But I think another two months or so and BoE will call down with rate increases. I am planning to utilise my PSA in the highest paying one year fixed rate account and put the rest in a cash ISA. Of possible will also open one or two regular saving accounts but would need to ensure it will not go over my PSA when added from the expected return on my one year fix.

Any better ideas for no risk saving?

It may be better, if it’s possible for you, to choose a 2 year fixed rate account either instead of or as well as the 1 year fixed rate account that you’re planning to save some of your money in. As well as the 2 year fix being very likely to offer a significantly better interest rate, there is a distinct possibility that, in just over a year’s time, the interest rates on the various maturity options for the 1 year fix will not be very good, due to inflation and interest rates generally being on a clear downward trajectory by then!

sultan123

PawelK said:

I am keeping my savings right now in premium bonds, easy access in HSBC and Al Rayan. But I think another two months or so and BoE will call down with rate increases. I am planning to utilise my PSA in the highest paying one year fixed rate account and put the rest in a cash ISA. Of possible will also open one or two regular saving accounts but would need to ensure it will not go over my PSA when added from the expected return on my one year fix.

Any better ideas for no risk saving?

What are Al Rayan like as they dont seem to give interest as such?

Also can one have multiple savings accounts at various places?

PawelK

Thanks cricid. Yes, of the trajectory is downwards it may be good to split savings onto one and two year fixes so the interest in each is within my PSA allowance. Although so far, two year fixes are not significantly better than one year IMO.

Band7

sultan123 said:

PawelK said:

I am keeping my savings right now in premium bonds, easy access in HSBC and Al Rayan. But I think another two months or so and BoE will call down with rate increases. I am planning to utilise my PSA in the highest paying one year fixed rate account and put the rest in a cash ISA. Of possible will also open one or two regular saving accounts but would need to ensure it will not go over my PSA when added from the expected return on my one year fix.

Any better ideas for no risk saving?

What are Al Rayan like as they dont seem to give interest as such?

Also can one have multiple savings accounts at various places?

For Al Rayan, see my answer to your thread about them.

You can have as many savings accounts as you like, sometimes even more than one with the same provider.

PawelK

Worth mentioning that if a savings account will bring me higher interest than ISA even after paying tax above my PSA, then it's still worth going for the latter option.

Band7

I did some numbers this afternoon with the best currently available ISA rates. Haven't added anything about PSA as I am busting it already.