Which is better?

SparciaM

8% Regular Saver, 7% Tax Free Regular ISA, or 6% Tax Free Normal ISA?

I opened a reg saver with FD for £250pm and now they've brought out a reg ISA saver at 7% and just worked out if it would be better stopping the reg saver and moving it into the reg ISA saver, or keeping the reg saver open and just opening a normal ISA.

I can't afford to have to have the reg saver and reg ISA open as only have enough funds for £250pm.

debbie42

It depends on your tax status, and also whether you have any penalties for closing the current regular saver down? Normally, for a 20% tax payer, 7% tax free is better than 8% gross.

As for the other ISAs 7% vs 6%, it depends whether you want to invest a lump sum or not.

SparciaM

The plan was to save £250pm in the reg saver (till December 2008) and then transfer the £3000 plus interest to an ISA and top up to £3600.

I guess the only thing is, if I have a reg ISA, I wont be able to top up if I only put £250pm into it.

nicko33

it may be best to keep the FD RS going at the minimum £25/month, and put the rest into the ISA RS.

The only way to get money out of the RS is by closing it, and if you close it early you don't get the 8% (net 6.4) rate, you'll only get 3.5% (net 2.76) (i think).

Losing 3.64% (6.4-2.76) on the RS interest isn't worth trying to get an extra 0.6% (7.0-6.4) by moving it to the ISA


edit:
if the FD RS matures before the end of this tax year, you can wait until then to move the money into an 08-09 ISA