How best to split savings - ISA and Savings Account

MrDebtWarrior

Hi, looking for some pointers on how best to split savings so that I'm earning the most and limiting tax. I have an idea on what to do but I know some on here may have better suggestions.

I have £54k in savings, I won't need the money for anything in the short to medium term but I also don't want it locked away and inaccessible.

I was thinking of putting £20k into an ISA to maximise that, then the remaining £34k into the highest paying savings account.

Is this the best route? Any suggestions/comments welcome.

Albermarle

What kind of Cash ISA?
Easy access?, notice account?, one year fix? three year fix?

What kind of normal savings account ?

Without knowing this it is not possible to compare.

If both ISA and non ISA are the same type, then the non ISA has to have a 20% better interest rate to make it a better deal.

MrDebtWarrior

Thanks Albermarle, this is exactly why I posted as I need to get closer to the points you have made.

Cash ISA - Yes
Would rather easy access, or short period notice.

Savings Accounts - Easy access/normal.

Bigwheels1111

Re ISA, Virgin money have good rates 1st or 2nd highest.

Plus you can open a new ISA with them and fund with the old one within the 14 day cooling off period.

I fixed for 3 yeas at 5.2% three weeks ago, rates went up and switched to Virgin 3 year at 5.5%.

Will switch again on Friday to 5.55%, giving 14 dat cooling off period.

Just in time fo BOE to raise rates and move again.

First ISA is closed and second is funded from first + any interest, And around we go again.

Virgin ISA'S tend to have the lowest exit fees, 60, 90, 120 days interest penalty.

Click on rate order.

https://moneyfactscompare.co.uk/isa/fixed-rate-isas/?quick-links-first=false

Albermarle

MrDebtWarrior said:

Thanks Albermarle, this is exactly why I posted as I need to get closer to the points you have made.

Cash ISA - Yes
Would rather easy access, or short period notice.

Savings Accounts - Easy access/normal.

For example the best paying easy access accounts are paying around 4.4%/4.5%
The best paying easy access Cash ISA's are paying 4.2% .
Compare The Best UK Savings Accounts (moneyfactscompare.co.uk)
So 4.2% with no tax is better than 4.4/4.5% minus 20% tax.

However that assumes you will be paying tax on interest, as you can earn a certain amount tax free.
Tax-free savings: check if you're eligible - Money Saving Expert

jimjames

MrDebtWarrior said:

I was thinking of putting £20k into an ISA to maximise that, then the remaining £34k into the highest paying savings account.
Is this the best route? Any suggestions/comments welcome.

What about S&S ISA if you don't need the money short term? Also what about pension?

MrDebtWarrior

Thanks for all our replies. I have some thinking to do and your comments have really helped.