Full ISA Guide Discussion Area

DrEvazan

I'm sure this must have been discussed somewhere but I don't know where to start looking in all of these Threads! So I'll keep it short.

I want to open and ISA. Some of the best one listed on this site say they pay interest annually. What does this mean? I have noticed that if I open one now - April - one of them says it pays October. So what happens next April when this ISA comes to an End? Do I leave the money where it is until the following October to get the interest, although the rate will probably have dropped, or do I move it to another one, but what happens to the interest, do I lose it?!

Hope this makes sense - as it doesn't to me?! Last year I had and ING ISA that paid monthly and I knew where I was. Its the paying interest annually that has confused me!

Thanks for your help in advance.

innovate

Interest will be calculated based on the balance at the end of each day.

You need to distinguish between how interest is calculated, and when you get paid it.

You will get paid every penny due to you, according to the applicable T&Cs.

Giggs_11

Hi,

I currently have £7k in savings with Halifax. However I want to put £5k of it into a different account, separate from my day to day dealings.

Would I be better off taking out a Halifax ISA or just going to say Barclays or HSBC and opening up another current account? I will be withdrawing from the £5k savings from time to time.

Many thanks!

The_Enforcer

Giggs_11 wrote: »

Hi,
I currently have £7k in savings with Halifax. However I want to put £5k of it into a different account, separate from my day to day dealings.
Would I be better off taking out a Halifax ISA or just going to say Barclays or HSBC and opening up another current account? I will be withdrawing from the £5k savings from time to time.
Many thanks!

If you decide to open an ISA, you want one which permits withdrawals without transfer penalties. Assuming your £7k is in a Halifax current account, then you can open this ISA, which currently offers the best tax free rate for the amount you can invest with instant access:

Cheshire BS ISA Saver (issue 3) - 2.30%
Rate guarantee? No. Rate effective from: 06/04/2013.
Minimum deposit: £1,000+ (to qualify for the higher rate). Operated via: Post or Telephone.
Important: Rate includes a 1.80% bonus until 31/10/2014.

Alternatively/in addition, you could open a Nationwide Flexdirect Current Account and keep £2,500 in there, which would earn 5% gross for 12 months for every month that you pay in £1000. Also, you could open the Santander 123 Current Account which earns a sliding gross interest rate (1% £1k-£2k; 2% £2k-£3k; 3% £3k-£20k) for every month that you pay in £500 and there is a fee of £2/month. This rate is available until further notice. And there is also the Lloyds Vantage Account that offers 1.50% AER/ 1.49% GROSS variable on balances from £1 to £999.99 and get up to 3.00% AER/ 2.96% GROSS variable on balances of £3,000 to £5,000.

rastor2003

Dear Innovate

Please tell me is there a restriction on the number of ISAs a person can open in each year.

Thank you;

Warm regards

Brad

AlwaysLearnin

rastor2003 wrote: »

Dear Innovate

Please tell me is there a restriction on the number of ISAs a person can open in each year.

Thank you;

Warm regards

Brad

I'm sure innovate may be getting slightly weary of that one, so I'll answer.

You can only contribute to one cash ISA and one S&S ISA in any tax year, up to the limits allowed.

You can hold ISA's from previous years with different providers:

http://www.moneysavingexpert.com/savings/best-cash-isa#work

flyingmamma

I hav recently stopped spending and started saving.... It has been a long time coming ! Tomor I'm off to halifax to open a cash isa for myself and 2 for 2 of my kids , the other already has a Ctf with halifax. As a novice saver I'm a bit worried about having to open isas every year ... Is that how it works? Can I just keep saving in the same one? I shud reach my limit but the kids will not. Sorry if this is an annoying question I'm clueless when it comes to savings I just keep money in current acc.

innovate

You normally do want to open a new ISA each year because the interest rate on your "old" ISA will be so dreadful compared with what you can get in a new one. A lot of ISAs have bonus rates that vanish after 12 months or so. Also, interest rates are so bad now, the only way they can really go (so I hope) is up.

You also would normally want to ask a new ISA provider to transfer your old ISA to one with a better interest rate.

But you should not worry about this now - - come back next year when it needs doing. It won't be very complicated and/or time-consuming either.

Giggs_11

The_Enforcer wrote: »

If you decide to open an ISA, you want one which permits withdrawals without transfer penalties. Assuming your £7k is in a Halifax current account, then you can open this ISA, which currently offers the best tax free rate for the amount you can invest with instant access:

Cheshire BS ISA Saver (issue 3) - 2.30%
Rate guarantee? No. Rate effective from: 06/04/2013.
Minimum deposit: £1,000+ (to qualify for the higher rate). Operated via: Post or Telephone.
Important: Rate includes a 1.80% bonus until 31/10/2014.

Alternatively/in addition, you could open a Nationwide Flexdirect Current Account and keep £2,500 in there, which would earn 5% gross for 12 months for every month that you pay in £1000. Also, you could open the Santander 123 Current Account which earns a sliding gross interest rate (1% £1k-£2k; 2% £2k-£3k; 3% £3k-£20k) for every month that you pay in £500 and there is a fee of £2/month. This rate is available until further notice. And there is also the Lloyds Vantage Account that offers 1.50% AER/ 1.49% GROSS variable on balances from £1 to £999.99 and get up to 3.00% AER/ 2.96% GROSS variable on balances of £3,000 to £5,000.

Thank you for your reply. I found one from Halifax for 1.95% which I think would be easier to keep it all under 1 bank, does this mean I'll get around £800 of interest per year from around £5k? And obviously you can only have £5.56k in an ISA so would I need to withdraw the interest every year?

innovate

Giggs_11 wrote: »

Thank you for your reply. I found one from Halifax for 1.95% which I think would be easier to keep it all under 1 bank, does this mean I'll get around £800 of interest per year from around £5k?

1.95% AER on £5000 yields £97.50 a year.

Giggs_11 wrote: »

And obviously you can only have £5.56k in an ISA so would I need to withdraw the interest every year?

You can keep as much as you like in an ISA. You just cannot deposit [yourself] more than you annual allowance in any one year. Interest earned does not count towards your annual allowance.

E.g I know someone who yesterday had some £31K in an ISA, accumulated over the years. They were paid about £1,300 in interest today, so their balance is now something over £32K. They have not yet made any deposits into an ISA this year, so they still can deposit £5,760 (though not into the old ISA since that one has been closed for new deposits for some time).