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To ditch or not to ditch

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Hi, 
After watching last weeks Martin Lewis show I'm wondering if our ISA's are a waste of time. I get the full state pension but also receive in excess of £12k via a military and a works pension thus my £40k ISA may be worthy of remaining tax wise?. My wife receives a very much smaller state pension (just over £4k pa.) she has never had a full time job but did some part time work whilst I was in the forces. We're both 74. In her case she has £44K in a Charter Savings cash ISA earing 1.8% --- should she ditch this and switch to another savings product? I may be totally wrong, but, tax wise I don't think she earns enough to make the 1.8% interest of the ISA 'cost effective. Advice please...thanks (in anticipation) 

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  • masonic
    masonic Posts: 27,153 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Given you can get 2.5% on an easy access cash ISA (or even 3% with Virgin money if you have a current account with them), then you can do better within an ISA. The best standard easy access rate is 2.81%.
    Where normal savings accounts will tend to have an advantage is in the fixed rate market.
  • albatosh said:
    Hi, 
    After watching last weeks Martin Lewis show I'm wondering if our ISA's are a waste of time. I get the full state pension but also receive in excess of £12k via a military and a works pension thus my £40k ISA may be worthy of remaining tax wise?. My wife receives a very much smaller state pension (just over £4k pa.) she has never had a full time job but did some part time work whilst I was in the forces. We're both 74. In her case she has £44K in a Charter Savings cash ISA earing 1.8% --- should she ditch this and switch to another savings product? I may be totally wrong, but, tax wise I don't think she earns enough to make the 1.8% interest of the ISA 'cost effective. Advice please...thanks (in anticipation) 


    If her only non savings (and non dividend) income is say £4,300 State Pension then she can earn £13,010 in total in interest before she would have to pay any tax on it.

    So any non ISA account paying a higher rate would be better given she would never realistically exceed that from capital of £44k.

    It would be even more is she hasn't applied for Marriage Allowance.

    Obviously your £40k would do better in your wife's name in a non ISA account but doing that would mean you introduce a whole different risk to just losing money from the effects of inflation 😳
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