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where to put my mums rainy day money

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Hi everyone hope you can help me my mother want to earn as much interest as she can from her rainy day money which is currently sitting in my nationwide currently in my cashbuilder account massing a little bit of interest but not much considering she never touches this money ever (8000+int) and neve adds to it so it is jus sitting there, any ideas on what to do with it she says she doesnt want to be penalised for taking money out of it but the likelihood of that happening is minimum i mean £8000 for a rainy day is she expecting a monsoon.
so there it is one saving account that gives high interest and no or low penalties for taking money out.
Many thanks to you all.

Comments

  • chesky369
    chesky369 Posts: 2,590 Forumite
    Has your mum got ISAs?
  • gally56
    gally56 Posts: 101 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    no she has not got ISAs just bit more info she is a pensioner with very little income and the money came form a life insurancwe policy maturing
  • dizzie
    dizzie Posts: 390 Forumite
    Hi Gally56,

    If your mum is on benefits, e.g. pension credit, as far as I know you are allowed to have £6000 in assets (e.g. money in bank/at home etc) before these start to affect her benefits. If, for example your mum has a balance of £1000 in money elsewhere (e.g. some in a current account and some at home), then, so long as she does not have any other assets like land which could affect her benefit entitlement, then could have £5000 in savings. So she might want to look at putting £3600 in an ISA and topping it up a bit more next year.

    In the meantime, if she has £8k plus, then this is likely to affect any benefits she may receive like pension credits. It looks like the money is all in your name at present. I would look into the legalities of whether your mum could, say give you up to £3k as a gift (...of course you could bear this in mind if she ever needs helping out in the future), and maybe you could put some in a joint savings account in yours and your mum's name. For joint accounts, I think the IR treat the money as belonging 50:50 to each of you, although any one of you can draw it out.

    As I say, I'm not sure of the legalities of all of this, never having been in a similar situation, but I'm sure that there will be other people on here who do.
  • gally56
    gally56 Posts: 101 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Thanks Dizzy but she declared the 8000 so she is squared up on that for her benefits. So what is the best ISA and how do they work
  • gally56
    gally56 Posts: 101 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Whats the best ISAs and how do they work
  • Mikeyorks
    Mikeyorks Posts: 10,377 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Decide what part of the £8k is really not needed .. and put it in a fixed rate savings account for 6 - 12 months. You should get close to 7% gross (and can file an R85 to get the interest paid without tax - if she is not a taxpayer).

    Of the rest of the £8k ..... which may be needed ... put that in an easy access ISA :

    http://www.moneysavingexpert.com/savings/best-cash-isa
    If you want to test the depth of the water .........don't use both feet !
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