Opening an ISA for this tax year

stressmonkey_2

I currently have 6K in a nationwide savings account. As I'm on maternity leave I know at some point I will need fast access to this cash before the end of the 2008.
I'm confused about the advantages of opening an ISA for this tax year - how is the interest worked out given it will only be there for 7 days of this tax year, is it really worth me opening one so late in the year?
Also what happens with this account (and my £3k cash) at the end of this financial year? I need to be careful not to tie the cash up given I will need it later this year.
Sorry if all this is written elsewhere!

CLAPTON

Nearly all savings accounts build up interest on a daily basis... so the earlier you start the more you earn.

When they actually add the interest to your a/c depends upon the ISA.. some will pay monthly and some yearly.

At the end of the financial year nothing specific 'happens' to the a/c it just goes on accruing interest (tax free) for as long as you leave it there.

If you choose an instant access a/c then you can withdraw your money whenever you like.

Or you can save up to 3,600 after 6th april either in the same a/c (making up to 6600 plus interest ) or open a completely new one.

martinman3

stressmonkey wrote: »

I currently have 6K in a nationwide savings account. As I'm on maternity leave I know at some point I will need fast access to this cash before the end of the 2008.
I'm confused about the advantages of opening an ISA for this tax year - how is the interest worked out given it will only be there for 7 days of this tax year, is it really worth me opening one so late in the year?
Also what happens with this account (and my £3k cash) at the end of this financial year? I need to be careful not to tie the cash up given I will need it later this year.
Sorry if all this is written elsewhere!

I hope that your money is currently in an e-savings account as that has the best rate for instant access (after transfer to a FlexAccount ).

Assuming that you withdraw all £6k at end of year, i.e. left for 9mths, rates stay the same and you are basic rate taxpayer.
If you put £3000 in Nationwide instant access ISA at 5.05% (ugh!) before April 6th and another £3000 from April 6th you would have earned approx £227 interest.
If you left the £6000 in e-savings 5.30%, (4.24% net) you would have earned approx £190 interest.