Confused with ISA's

Paranoid124

Hey All,

I'm just trying to get my head around ISA's as I'm soon to have some cash to stick into one (unfortunately after this financial years deadline).

I've been following Martin's guide (http://www.moneysavingexpert.com/savings/best-cash-isa#improved), but when using the ISA calculator I enter £1500 as my current amount, and £200 as monthly deposits...and the total after a year comes out at £70 extra...yet Martin talks about earning £500 over the year???

Where am I going wrong?

Paranoid124

I should note I stuck 6.5% as the interest rate (took a rough average from the guide just for an idea).

Mikeyorks

Paranoid124 wrote: »

...yet Martin talks about earning £500 over the year???

Where am I going wrong?

Not reading it properly:p :-

A basic rate taxpayer saving £3,000 over three years, in a poor savings account, of which there are sadly many, would earn £70 interest. In a top savings account it's £500, but the same amount in the top cash ISA, as it's tax free, earns £580

..... not sure where you went wrong with the calculator .. but using your figures came out as approx £180 interest over one year. Bear in mind you obviously get a lower rate of return if you add money monthly as opposed to putting in the total at the beginning of the year? Taking your 6.5% ... if you put £3k into an ISA 6th Apr - it would be worth £3623 at the end of the 3rd year.