Should I Transfer Or Withdraw/Deposit? - Cash ISA

jonathan.carling

This might be a dumb question but I'm not sure on what best to do. I have just over £15k in my Moneybox Cash ISA, currently getting 3.45% interest. I've had this ISA for over a year now and I've not deposited any money in this tax year. I also have an outstanding loan of about £5k which has about 12% interest on so I believe it makes sense to clear this using the ISA funds.

Before I do that, I'm thinking of moving these savings to another ISA for a better rate and I'm considering both these:

Trading 212 – 4.62% (top for new money)

Vanquis – 4.3% (top for transfers)

So my question really is; which of these two options is the best:

1. Withdraw the whole £15k to my current account, paying off the loan, open a Trading 212 Cash ISA and depositing the remaining £10k into there, or;

2. Withdraw £5k to my current account, again paying off the loan, open a Vanquis Cash ISA and then transfering the remaining £10k into there

The only other things to consider is I plan on setting up a regular payment of around £200pm to effectively "pay myself back" so I feel like it's a trade off between the two options… Or maybe there's a third option I haven't thought about. Any suggestions/advice would be much appricated.

Thanks!

eskbanker

Paying off a 12% loan definitely seems sensible - option 1 uses £10K of your £20K 2026/27 ISA contribution allowance, whereas option 2 doesn't, so this is a differentiator that may or may not be important to you.

jonathan.carling

Yeah I think paying off the loan is a no brainer (unless of course I needed my savings anytime soon which I don't think I will).

I'm leaning towards option 1 as it's very unlikely (unless I come into some unplanned income) to use up the remaining £10k allowance for the tax year so unless there's any better argument for option 2 (or any other suggestions) I think that might well be the best option? 😬

Ayr_Rage

If you don't plan on adding to the ISA and the £10,000 is sufficient as your emergency fund then Option 1 is very sensible.

The T212 ISA is flexible so you can remove funds and add those back in at will.

sammy_zammy

Option 3: transfer to T212 or Vanquish, remove £5k, then you can redposit £5k later in the year if your circumstances change without losing any allowance as it is flexible.

jonathan.carling

Thanks for everyone's advice - I went for option #1 in the end based primarily on the fact I doubt I'll be able to pay in much this financal year so it made most sense to me getting the best rate possible which at the time of writing is by paying in "new money" with Trading 212.

Loan is gone, interest is growing daily! 😃

friolento

https://forums.moneysavingexpert.com/discussion/comment/81963334#Comment_81963334

ISA transfers into T212 only get the basic AER. Only new money gets the uplift.

Option 1 seemed the best option ✅