Regular savers or ISA

VXman

I'm getting fed up of exceeding my savings interest allowance. I earned £1432 in interest this last year due to instant savings account (for misc. spending e.g. holidays, un planned large items spending.) and 8 regular savings accounts. OK it's just £86 of interest but it's annoying having to pay that in arrears.

So, just wondering. Is it better or the same (in terms of income) to have a instant access (flexible) cash ISA to 8 regular savers.

I know its possible to do the sums but it's too complicated for my brain. Just want a general feeling.

wiseonesomeofthetime

Obviously depends on the interest rates applicable to each account.

I'd never get fed up of earning in excess of £1000 interest, net of tax tbh.

Exodi

VXman

I know its possible to do the sums but it's too complicated for my brain. Just want a general feeling.

What you've said suggests you're a basic rate tax payer.

There's no reason you couldn't, for example, move ~30% of your money into an ISA so the rest of the interest is within the savings allowance.

Really it's hard to give definitive answers without knowing the rates you're earning on your Regular Savers and the balances in question, but for me, the rates I get on my Regular Savers are nearly double what I get in a Cash ISA, so it wins out even as a higher rate tax payer, if those were the only two options.

Personally, I focus our cash into a S&S ISA instead, which I'd expect to beat both, but this is obviously a longer term strategy.

We can help with the calculations if you let us know the rates, balances, etc. This is just a Maths puzzle.

surreysaver

Depends whether what you earn in an ISA is more than what youd earn outside of an ISA and after tax. Most regular savers will earn you more after tax than an ISA, assuming you're a basic rate tax payer.

Multiply the ISA rate by 1.25 for accounts maturing this tax year, or 1.282 for next tax year, to see what you'd need to earn before tax for it to be worthwhile.

To quote someone else who frequents this forum 'don't let the tax tail wag the dog'.

HedgehogRulez

both is good?

Newbie_John

Ok so you've earned £1346 interests on the unknown amount.

We can't tell you if this unknown amount would generate more in ISA.

Guessing you have about £20k - a 4.5% ISA would make £900 tax free. Now, if you're able to still use the regular savers using leftovers from salary you could combine both.

How do you treat the time that requires sending money to all these accounts - as hobby or pain? How long does the money remain in current 0% account before it's transferred? Do you need the money for any specific reason, short term, house?

A lot of variables..

VXman

https://forums.moneysavingexpert.com/discussion/comment/81956661#Comment_81956661

Yep - a difficult one. I was just trying to get an rough overall idea.

The money to feed the reg savers comes from an instant saver account (currently getting 4.5%) So it's getting 4.5 anyway and then anything between 5 and 7 in the regulars.

The other unknown is that if I was to use my ISA allowance instead that would restrict what I could put into a S & S ISA which would probably make more.

I'm retired and enjoy 'playing' with finances so not a chore. The money concerned is short - medium term savings for holidays, travel, social, unforseen bills (car, house etc) therefore wanting to keep it avaliable.

surreysaver

https://forums.moneysavingexpert.com/discussion/comment/81958519#Comment_81958519

In which case, instead of using an instant access account paying 4.5%, use a flexible ISA. Tesco currently have one paying 4.02%.

As long as the regular saver pays more than 5.2%, it will earn more after tax if you put the money in the regular saver(s), assuming you're only a basic rate taxpayer.

Then if you want to put the money in a S&S ISA, you can do so by removing the money out of the flexible ISA.