Multiple ISA's - advantages / disadvantages

Gromit1234

Are there advantages or disadvantages to having several fixed rate Isa's ie. £80k in one or spread over 3 or 4 ISA's?

slinger2

The arguments are really no different to those for non-ISA savings. Are you worried about the £85 compensation limit? Do you want all your savings in the same account or do you prefer a mixed bag: some in fixed rate (maturing at different times perhaps), some in easy access, etc? ISA savings tend to held for the long term, which obviously affects people's ideas.

Personally I've got 5 Cash ISAs currently with different providers, 3 fixed rate, 2 easy access (flexible).

Kim_13

Fixed Rate ISAs always have to allow you access to the cash, even if they apply a penalty for doing this (most do.) Some providers will allow you to part withdraw, so you only pay the penalty on the sum you need access to but others require you to close the account and pay the penalty on the entire sum. 

If the providers are those that require the whole amount to be taken/transferred out (as transferring to an Easy Access would be a way of retaining ISA status on the part of the money that you didn’t need access to) then it would make sense to break it down into several ISAs, so you’d only have to pay a penalty on one and keep the hit to a minimum.

You wouldn’t want any one ISA above £85K with the interest being paid away (to ensure it’s all FSCS protected.) In most cases it’s best to have interest added to the ISA, but if you night need access to the money then having monthly income paid away might help prevent a penalty needing to be paid.

refluxer

There are no right or wrong answers to this but, personally, I tend to keep my ISA allowances separate as I like the flexibility that this offers.

It allows you to adopt a 'savings ladder'-type of approach, where different fixed rate ISAs mature at different times throughout the year and/or over different years, which helps to smooth out interest rate fluctuations.

Other advantages of doing this are that you potentially have penalty-free access to individual chunks of money throughout the year and that the FSCS limit isn't an issue, meaning that you're also free to open other savings accounts with the same provider.

The only downside I can see is that it takes a bit more managing, so you have to be a bit more on-the-ball with your finances and keep an eye on your maturity dates. Combining ISA allowances into one large chunk is obviously easier to manage but you have to be mindful of the FSCS limit and also avoid ISA providers who don't allow partial transfers out if you want to be able to split the balance at a later stage.

ColdIron

I don't use cash ISAs but do have several fixed rate accounts. I like having them mature throughout the year. It helps cash flow and doesn't lock you into whatever the prevailing rate is at that time

If I had only used one last April I would have missed out on the high rates available July to October last year

PS there is no apostrophe in ISAs

where_are_we

As soon as I could see cash interest rates rising (making the personal savings allowance of £1000 more easy to exceed)  I changed my ISA contributions from Stocks and Shares ISAs to cash ISAs. At my age it is probably best to move more of my assets into cash so this fitted in with my plans.

The new 24-25 ISA rules means I have a mixture of fixed rate cash ISAs and flexible cash ISAs. Depending on respective interest rates I will use my flexible cash ISAs as quasi easy access accounts for withdrawals and when my regular savers mature I will make replacements towards these withdrawals.

I will need to make sure to replace all my withdrawals before the end of the tax year that they are made in to safeguard my total ISA money.

Multiple ISAs and their complexities will take a good deal of managing. Its a new world.

Thanks to Cold Iron for stating no apostrophe in ISAs - its like being back at school again! I will endeavour to comply!

Gromit1234

Thank you very much for the advice and useful information. Sorry about the apostrophe, should know better.

ColdIron

where_are_we said:

Thanks to Cold Iron for stating no apostrophe in ISAs - its like being back at school again! I will endeavour to comply!

You're welcome. BTW there is an apostrophe in it's

clowning

ColdIron said:

where_are_we said:

Thanks to Cold Iron for stating no apostrophe in ISAs - its like being back at school again! I will endeavour to comply!

You're welcome. BTW there is an apostrophe in it's

  Love it  

Bridlington1

ColdIron said:

I don't use cash ISAs but do have several fixed rate accounts. I like having them mature throughout the year. It helps cash flow and doesn't lock you into whatever the prevailing rate is at that time

If I had only used one last April I would have missed out on the high rates available July to October last year

PS there is no apostrophe in ISAs

I don't currently use fixed rate accounts (barring some regular savers), though when I'm back in the market for fixed rate accounts I'll probably stagger them a bit for the reasons you mention. They could slot in quite well with regular saver maturity dates. 

PS sorry, there is also a full stop at the end of sentences.

ColdIron

Bridlington1 said:

ColdIron said:

I don't use cash ISAs but do have several fixed rate accounts. I like having them mature throughout the year. It helps cash flow and doesn't lock you into whatever the prevailing rate is at that time

If I had only used one last April I would have missed out on the high rates available July to October last year

PS there is no apostrophe in ISAs

PS sorry, there is also a full stop at the end of sentences.

I know, but after 32 years as a developer I relish no longer being constrained by unnecessary syntax such as end of line terminators