draw interest out of isa's or close poor performing isa?

kats53

I need to draw some money out for house renovations, however I'm not sure what is the best thing to do. Is it best to draw on the interest on all my cash isa's or to close a poor performing cash isa and use that. My instinct is to use the interest gained and keep all the years open but I'm just not sure if its the right thing to do. Anyone help me with this please?
thanks

earlgrey_3

I don't think it makes any difference. You can only pay in up to your annual allowance but the interest you get doesn't count towards that.

I'd take money from whichever account pays the lowest interest and provided you don't have to pay any penalty in lieu of notice.

If some ISAs are paying well below par you could also move and consolidate them all into a better one

dzug

You can take the interest without losing ISA status.

If you close one you've lost that year's allowance.

Why not take the interest as needed - and transfer the poorly performing one to a better provider?

Browntrout_2

Interest or original investment is all just cash and the same. You have to spend it sometime so no problems.

If these ISAs are with different providers than withdraw from one with no interest penalties and lowest interest rate payable, check you do not go below some potential threshold where all your interest rate might be cut.

The only potential issue I can see is if you were looking to save more cash this year (2008/2009) and had already used your full allowance, and withdrew some you could not put it back again this year.

kats53

Thanks for all you advice. No I haven't used this years allowance yet. I have one isa which I've had for a few years, I've already taken cash out of this one so there only just over a grand left in it, I was just going to use that but wasn'y sure wether to lose that years tax free status. Its paying a poor 4.50 but I didn't transfer it because I thought I would just close the account.

earlgrey_3

kats53 wrote: »

I was just going to use that but wasn'y sure wether to lose that years tax free status.

Kats, if you draw out £10 of interest you can't put it back in again. The tax-free status of that interest is lost. If you draw out £10 of your capital it's just the same, you can't put it in again.

This year you can pay in a maximum of £3600 and that's not affected by whether you draw out capital or interest from this year's ISA or any previous one. Whichever way you do it you end up with less smackers in your ISA pot.

kats53

Yes Earlgrey your right, whichever way I do it its not going to matter. I think I'll just close the ISA that's not performing well and use that, unless I win the lottery of course!