Easy-access cash ISA options

Jimbouk

My wife and I each have a £20k bond maturing, which we plan to invest into a cash ISA using our current tax-year allowance.

Our goal is to use it as an easy-access 'dip-in' pot with no withdrawal penalties, as the rest of our ISAs are currently tied up in fixed-rate accounts or stocks and shares ISAs. Our strategy is to make purchases on a credit card and pay them off in full at the end of the interest-free period using funds from this easy-access ISA.

We've been looking at app-based providers like Chip and Trading 212. We would really appreciate any advice based on real-world experience with these or other platforms—specifically regarding the speed of withdrawals/transfers out, and any potential pitfalls to look out for.

Thanks in advance

Jim

Hal17

I use a Ford Money Flexible Cash Isa for this type of situation. If you request a transfer before 1.00 pm the money arrives in your nominated bank account the same day. Current interest rate is 4.21%.

where_are_we

make sure your cash ISA is flexible

inkydolphin

Any disadvantages of using a flexible cash ISA in this way other than withdrawal timescales? I can't think of any.

Edit: To answer OPs question, I did a test withdrawal of £10 from my Trading 212 easy access ISA yesterday. It said it would take 2-3 days but it's in my bank account this morning.

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82173107#Comment_82173107

There needn't be any disadvantages e.g., Trading212's Isas are flexible and, in my experience, withdrawals to my current account are near instant.

inkydolphin

https://forums.moneysavingexpert.com/discussion/comment/82173109#Comment_82173109

Agreed. I'm just new to flexible ISAs and can't believe they aren't pushed more.

Edit: I mean pushed more generally in savings advice rather than when looking into ISAs. Unless they are and I missed it - entirely possible!

TurbulentCourage

If you don't need the Capital for a year you could open a Shawbrook 1 year fixed rate account and when applying get the interest paid to your nominated account. With their current offer of 4.97%, the £40k would generate an average of around *£160 per month over the year although, If you were to dip into the capital, you would lose 90 days of interest on the amount withdrawn. My (one) experience withdrawing funds was quick - within a couple of hours.

*Depending on who you bank with you could open a high interest regular saver account and, should you not need the £160 received that month, put it in there to earn (currently) up to 8% interest with most offering easy access.

If you would prefer an easy access ISA and think that you could wait one (business) day when 'dipping in', I would suggest Hargreaves Lansdown, currently paying 4.52%. In my experience with them - on the three occasions I did, the funds were received as stated (be mindful of when a request is made as on one occasion I requested it on a Friday, forgetting the Monday was a bank holiday, so not receiving the funds until Tuesday)

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82173124#Comment_82173124

You are right, the advantage of flexible ISAs is not talked about that much for some reason. They are especially useful for easy access cash ISAs, as you can take money out and replenish it without losing any ISA allowance.

poseidon1

This Is exactly what I am doing with my Paragon fixed rate flexible ISA. Interest is paid monthly (around £300) into my current account to service living costs.

In March just before the tax year end, I replenish all the interest withdrawn from taxable savings to start the new tax year with a higher ISA balance than I started with, a kind of have my 'cake and eat it' arrangement.

With my personal tax rate on savings increasing to 42% in the new tax year, this strategy for using flexible cash ISAs becomes even more important to increase year by year tax free income whilst utilising it at the same time.