isa advice needed

Zeusiblue

hello please could you advise me as i am new to isas. i opened my first mini isa with first direct today. i used this bank as i bank with them already and i wanted to place my money in by the end of this tax year, so this was the quickest option. not sure if i have done the right thing? would it have been better to place the money in for next years tax year , as i wont make much interest on 2007 / 2008 tax year as there are only 6 days left.or have i done the right thing and then add to it for next tax year? help please !:eek:

10_66

Not sure what the First Direct ISA rate is, but as far as opening an ISA goes, you haven't done the wrong thing in opening one, eventhough there are only a few days left. For 08/09, you're best opening an ISA as early as you can, to maximise the amount of interest you can earn. Check out other providers ISA rates before you add to your First Direct to see how they compare. Some links attached. You can transfer an existing ISA to another ISA provider (subject to the T&C's of your existing ISA and as long as the new provider permits transfers in of existing ISA's). You may wish to do this for a more favourable interest rate.

http://forums.moneysavingexpert.com/showthread.html?t=401374

http://www.moneysupermarket.com/Savings/Default.asp?p=0

http://www.moneyfacts.co.uk/savings/bestbuys/default.aspx

Zeusiblue

Thank you 10 66 thats is very helpful. when i looked at their description of the mini cash isa is states 6.00% AER (5.84% tax free) fixed until 6 March 2009, 4.65% variable tax free thereafter . im not sure if this is a good rate ? it does not mention anything regarding transfering your isa to another company and if there are any penalties or loss of interest.. interest is calculated daily. if i opened another isa with f.direct or another provider would i still earn interest on the first one even though we are going into a new tax year ?? it is all very confusing !:o

Purple_Peril

You have opened a 2007/08 ISA with First Direct - this will earn interest tax free as long as you keep the money in it. It looks as though you can get instant access to your money if you need it (withdrawal) and there don't appear to be any penalties moving your money elsewhere (transferring your ISA).

For 2008/09 you can either add to this ISA or open a new one and invest your £3600 for 2008/09. If your 'new' ISA accepts transfers in you may wish to transfer your FD ISA there (along with any interest it has earned) - but make sure that you transfer it - whatever you do, don't withdraw the money from your FD ISA if you want to pay it into another ISA or you will lose the tax-free status.

Zeusiblue

thats helpful advice and will help a lot. do you think the rate they are offering is good or average? thanks to purple peril for your advice:T

KiKi

6% is okay - the top one is 6.5 from Barclays.

However, when it drops to 4.65%, absolutely transfer elsewhere - that is not a good ISA rate. (A&L, for example, allow you to transfer previous ISA subscriptions into their accounts; theirs is currently 6.25%.)

You've added £3000 to an ISA in the 07-08 year which you'll earn interest on that as long as it's in the account. You can transfer it out at any time to another provider that accepts transfers in - which you should do when the AER drops.

You can add £3600 in the 08-09 financial year either to the FD ISA that you already have, or you can open a new ISA account elsewhere.

Essentially, you can have as many ISAs as you like, as long as:
* you NEVER put in more than the maximum amount allowed in each year (the interest you earn doesn't count)
* you only add to ONE ISA account each year (eg, if you open a Barclays ISA for 08-09, you can *only* add 'new' money to that one)

(Of course, the fewer ISAs you have, the more interest you earn on the interest you've gained.)

And the golden rule, as Purple Peril said: if you want to transfer the money, you must TELL your provider to do it for you; never, ever, ever withdraw it and do it yourself or you lose the tax-free element!

You can transfer previous subscriptions into a new or current ISA at any time - transfers don't count as adding 'new' money. Just be aware there are sometimes penalties for transferring out.

KiKi

Zeusiblue

Thank you thats fabulous help this site is great:j