Help please re £6k payment

donstermonster

I have an MBNA credit card and have just (today) received £6k interest free until December next year albeit i had to pay 3%

Question is what is a better return for me

Do i put into Cash isa (x2 with my wife) at 6.96% for 10 months (60 day notice)

Or pay off my mortgage which is fixed at 4.89% for 12 months and then take it back and pay off card before i my 0% period expires (no penalties at all on mortgage)

I am a 40% rate taxpayer

What is best?

Thanks
DM :mad:

CLAPTON

3% OF 6000 is £180 (i.e. 6000 x 3/100)

if you have no ISAs already (why dont you ???) then
6.96% of 6k for 10 months is £348
(i.e. 6000 x 6.96/100 x 10/12)

why is it only for 10 months?.. don't you get interest for the 60 days or what... if you dont the equvalent interest rate is only 5.8% so you would do better in a normal instant access ISA over 12 months
(i.e. 6.96% x 10/12)

4.89% of 6k for 12month is £294

jamesd

The ISA will be better than the mortgage for a tax payer.

But why aren't you already using your ISA allowances, particularly as you're a higher rate tax payer? Using those usually comes before making extra mortgage repayments and it's usually better to keep the money in the ISA and not pay the mortgage off until there's enough accumulated to clear it (and even that's a bad idea, better to wait until the end of the term).

For a higher rate tax payer using all 7000 of the ISA allowances every year is usually a good idea, even more than it is for basic rate. Doing otherwise is just volunteering to pay extra tax.