Move ISA to savings account, or leave as is?

vikkimcd

Hi,
I have had an ISA since April this year and the interest rate has already dropped twice since then. I also have a savings account which is now at a higher rate than the ISA. My question is, is there any downside to me finding a savings account and just lumping it all in there? I have worked out that I will not be over the personal tax threshold by doing this (work part time, etc.), and I am too irritated by having to move funds around potentially several times a year. I just want to put it somewhere and be able to leave it. Would I be missing something by doing this?

Archerychick

You can do that no problems, you’ll maximise your return by the sounds of it. Something to just think about is whether next tax year you’ll exceed the PSA, if so you could benefit from keeping some in an ISA before the end of this tax year. 

I basically move money around all year (I’ve taken more than £10k out of my flexible ISA this year) but ensure it’s added back in by end of March so I don’t loose the allowance. 

DRS1

Archerychick said:

You can do that no problems, you’ll maximise your return by the sounds of it. Something to just think about is whether next tax year you’ll exceed the PSA, if so you could benefit from keeping some in an ISA before the end of this tax year. 

I basically move money around all year (I’ve taken more than £10m out of my flexible ISA this year) but ensure it’s added back in by end of March so I don’t loose the allowance. 

I have heard of ISA millionaires but that is just ridiculous.

vikkimcd

I am glad you said that as I was a bit confused!!! 

LHW99

Why not look for an ISA with a better interest rate and transfer it there?

InvesterJones

vikkimcd said:

Hi,
I have had an ISA since April this year and the interest rate has already dropped twice since then. I also have a savings account which is now at a higher rate than the ISA. My question is, is there any downside to me finding a savings account and just lumping it all in there? I have worked out that I will not be over the personal tax threshold by doing this (work part time, etc.), and I am too irritated by having to move funds around potentially several times a year. I just want to put it somewhere and be able to leave it. Would I be missing something by doing this?

Unless it's a fixed rate savings account there's no guarantee that you wouldn't also want to move it around later even outside of the ISA. If it is a fixed rate savings account you're considering, then why not consider a fixed rate cash ISA instead?

But no, if you're sure you won't ever be paying tax on the compounded interest there's no difference (but it's very hard to know the future).

Albermarle

vikkimcd said:

Hi,
I have had an ISA since April this year and the interest rate has already dropped twice since then. I also have a savings account which is now at a higher rate than the ISA. My question is, is there any downside to me finding a savings account and just lumping it all in there? I have worked out that I will not be over the personal tax threshold by doing this (work part time, etc.), and I am too irritated by having to move funds around potentially several times a year. I just want to put it somewhere and be able to leave it. Would I be missing something by doing this?

Changing from an ISA to a non ISA savings account, will not mean that the interest rate will not change at some point and you will need to move it again.

Archerychick

DRS1 said:

Archerychick said:

You can do that no problems, you’ll maximise your return by the sounds of it. Something to just think about is whether next tax year you’ll exceed the PSA, if so you could benefit from keeping some in an ISA before the end of this tax year. 

I basically move money around all year (I’ve taken more than £10m out of my flexible ISA this year) but ensure it’s added back in by end of March so I don’t loose the allowance. 

I have heard of ISA millionaires but that is just ridiculous.

I wish! 😆😆😆😆 (now edited)

Angelica123

vikkimcd said:

Hi,
I have had an ISA since April this year and the interest rate has already dropped twice since then. I also have a savings account which is now at a higher rate than the ISA. My question is, is there any downside to me finding a savings account and just lumping it all in there? I have worked out that I will not be over the personal tax threshold by doing this (work part time, etc.), and I am too irritated by having to move funds around potentially several times a year. I just want to put it somewhere and be able to leave it. Would I be missing something by doing this?

I would also consider the opportunity cost. Eg. If in future years you may pay tax, you may benefit from maximising how much you have under the ISA umbrella. 

Rate cuts are happening to both ISAs and savings accounts so moving to savings won't stop you having to move accounts as banks cut rates on accounts. 

The difference of interest rates between ISAs and savings accounts (excluding regular savers) isn't huge. 

Ocelot

I would definitely consider a fixed rate ISA. I can only see rates dropping.

vikkimcd

Thanks all. I think I was hoping there was some great other method of saving that you guys might know about! Head out of the clouds time...