Cash ISA instead of regular savings account? Is there a difference?

UndergroundSaxClub

Hi all.

Bit of an odd situation, hoping for a shine of the light. I currently have a Santander Edge Saver account at 3.93% interest, of which anything over 4k I believe is subject to a lower interest rate, and a regular saver also at 3.93%, which will reduce to 2.96% on August 1st.

Having read the latest MSE newsletter they have a 4.92% Cash ISA with Trading212 for a year, and I am due to make a large mortgage overpayment in August of which there will be no early repayment charge.

My question is mostly about timing. Does it make sense to open a Trading212 account today, shift everything in and gain interest for 1 month before August, and then use it as a regular savings account due to the higher interest, or am I better waiting until after my overpayment for "safety" and simplicity, should anything strange occur?

masonic

The Edge Saver pays 6%. If you're getting less than that because the initial bonus has expired, you can close it and open another with the bonus rate.

The ISA is worth having, but the interest difference over 1 month is not going to be significant. Worth it for longer term savings, but perhaps not if it's only for money you will need for the overpayment.

Newbie_John

ISA is mostly beneficial to avoid tax if you reached your £500/£1000 limit. 
The 4.92% is variable so over year it will likely go down.
Also it takes some time to open it.

What rate is your mortgage? As is it's less than % you get from savings (after tax) then there's no point overpaying it..