Beginner saver seeks simple advice & clarification

m_s

I have never in my life saved money. I've mostly stayed out of debt, with a few brief exceptions - student loans and now and then small credit card debts. For the last few months, I've been living in overdraft, but have now almost clawed my way out of that. I'm waiting to hear if Barclays will give me a Platinum card so that I can transfer £600 of credit card debt at 0% for 14 months. And then I really want to start saving!

I have opened an ICICI HiSave account, but just recently started hearing about ISAs. At my present level of income and expenditure (I'm currently retraining, so after my fees and all, I only have about £700/month left over to pay mortgage and all). We're pretty frugal, and used to living on little, but still it's unlikely I will be able to save more than about £600/year.

Am I better off opening an ISA and setting up a direct transfer from my bank each month, or should I stick with the HiSave account until I have more to save in an ISA?

I apologise if this question has been asked and answered a million times before - with so much advice on the boards, I decided just to ask for my specific needs directly. Thanks for your advice!

CLAPTON

if you are a tax payer then use your ISA allowance first (3000 this tax year rising to 3,600 after april 6th).

only when you have used up your ISA allowance is it worth saving in a 'ordinary' taxed a/c unless its money you are constantly withdrawing (i.e. a bills a/c )

if you can save regularly, once you have used up your ISA allowance you may wish to look at regular savings... they often pay better than ordinary a/c although they aren't usually suitable if you can't save each month... consider the Yorkshire regular saver that pays 6.85% gross and you can saver between 10 and 500 per month.

depending upon how much you have you may find a combination of ISA, Regular saver and high interest a/c suits best.

Also consider whether your own bank has an online saver a/c .. with these you can move money instantly so its useful as a bills a/c so you can earn a bob or two with money hanging around to pay bills... but check the small print as some are rather restrictive.

m_s

So you would advise, instead of putting whatever I can into the HiSave account, I hold off on that until (a magical future date when) I can fill the ISA allowance, and then start putting any further savings into a high interest savings account? Great! Thanks.

(And thanks for the Yorkshire tip, too - I had thought the HiSave was the best return currently available - but I guess I'll not even bother with that for quite awhile...)