Advice for a 1st Isa (first direct)

steveh2001 · 5 September 2005 at 12:40PM

Hiya,

Just looking into getting my first isa, think ive got some of it understood. You can put £3K a year in a mini cash isa (and 4K in the Maxi Shareholder one) and you cant open more then 1 isa in other banks i guess.

Also from a bit of searching i guess the First direct is the best one to go with with 5.5% until Feb 06. From reading around it seems quite popular so i guess its safe to invest in. Also i think its fee free to transfer? If anyone could confirm this that would be helpfull. So i was planning to use the FD until feb 06 and then move to the next highest ISA at that point.

Can anyone let me know if this is a good plan? there is a 5% one in halifax, but 0.5% more is quite a bit!!

Thanks!
Steve

steveh2001 · 5 September 2005 at 1:05PM

Also - what does this mean, not 100% clear!

"upper limit of £10,000. This means that you can deposit the full 2005/2006 tax year allowance of £3,000 and also transfer any ISA balances from previous tax years, up to a maximum combined holding of £10,000 "

carnet · 5 September 2005 at 1:08PM

In any one tax year you can either open up a Maxi ISA with one provider only and put in up to the maximum of £7K (this is usually a Stocks & Shares ISA) or you can open a Mini Cash ISA up to a max of £3K and/or a Mini Stocks & Shares ISA up to a max of £4K.

The two Mini ISA's can either be with the same or, more usually, with two different providers.

Reaper · 5 September 2005 at 1:24PM

As this is your first ISA I take it that at most you have £3000 to save. If so it hardly seems worth the effort to go with First Direct. Over 6 months if you save the maximum £3000 it will earn you just £7.50 more than Halifax. Then you have the hassle of switching it and losing interest while it is in transit.

If I were you I think I'd go straight for Halifax. I should point out, however, that FD is fixed rate whereas Halifax is variable in case that affects your decision.

As for your second question what that paragraph says is that you can only save £3000 this tax year (by law), but if you had any ISA with other banks left over from previous years you could transfer them too as long as the total does not come to more than £10k.

steveh2001 · 5 September 2005 at 2:06PM

carnet wrote:

In any one tax year you can either open up a Maxi ISA with one provider only and put in up to the maximum of £7K (this is usually a Stocks & Shares ISA) or you can open a Mini Cash ISA up to a max of £3K and/or a Mini Stocks & Shares ISA up to a max of £4K.

The two Mini ISA's can either be with the same or, more usually, with two different providers.

Thanks for clearing that up!

steveh2001 · 5 September 2005 at 2:09PM

Reaper wrote:

As this is your first ISA I take it that at most you have £3000 to save. If so it hardly seems worth the effort to go with First Direct. Over 6 months if you save the maximum £3000 it will earn you just £7.50 more than Halifax. Then you have the hassle of switching it and losing interest while it is in transit.

If I were you I think I'd go straight for Halifax. I should point out, however, that FD is fixed rate whereas Halifax is variable in case that affects your decision.

As for your second question what that paragraph says is that you can only save £3000 this tax year (by law), but if you had any ISA with other banks left over from previous years you could transfer them too as long as the total does not come to more than £10k.

Yep ive got about £5K to play with - so was thinking £3K in isa and 2K for easy access cash.

Ok it now seems stupid going with FD! But it does seem the interest rates are dropping (the websaver has dropped) so would it be a good idea to go with FD and then transfer? Thus guaranteeing me to get 5.5% for 1/2 of the term?

MrChips · 5 September 2005 at 3:33PM

If you think the BoE base rate is going to drop further between now and Feb, then that will make the FD offer more attractive. Current thinking is that it will stay on hold for the short term at 4.5% (the voting at the last meeting when the rate dropped was just 5 to 4!) but anything could happen in reality. Of course, Halifax can lower (or raise) their rate at will and don't need the excuse of a base rate movement! You may prefer the guarantee a fixed rate offers. In my opinion, there is plenty of room for down side with the variable rate, but very little up side as it is extremely unlikely that Halifax' rate will go about 5.5% in the next 6 months. But as mentioned earlier, this must be balanced with the hassle of moving accounts come February.

Time for my question! Can anyone out there clarify for me whether I can open a FD ISA for a transfer only? I already have this year's £3k invested with NCBS at 5.15% pa (who charge a 10 day interest penalty so not moving it) but want to move my other allowances. I am unsure whether you can only open a new FD account with new money, and then transfer old ISAs in or whether I can open an account with a transfer? I phoned their helpline but the assistant wasn't sure either!

One of the ISAs I will be wanting to move is actually another FD one at 6.25% which drops in October. Will they have a problem with that?

Reaper · 5 September 2005 at 4:13PM

Mr Chips - my reading of the FD ISA details is that you can do just a transfer. Here is the relevent bit from the "What should I do next?" section:

enclose a cheque made payable to first direct, or complete the payment section on the application form for fund transfer or standing order

Now I may be misreading it but that says to me you can do just a fund transfer.

As to whether you can transfer from one FD ISA to another - I haven't asked them yet but I hope so as that's what I plan to do too. I am also hoping the usual lost interest during transfer won't occur for an internal move.

Advice for a 1st Isa (first direct)

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