ISA indecision - help please!

Jacster_2 · 2 May 2005 at 4:59PM

I currently have £3000 in Intelligent Finance's ISA at 5% - I've had this ISA since last year.

Having recently switched to Alliance and Leicester's current account, I ditched the plus saver (v poor) that comes with it and opened an online saver and online ISA as they were such good rates.

On reading the T&Cs for A&L's ISA, I see a transfer penaltly applies on moving funds out in the future. I haven't moved my funds yet - still with IF.

I've looked at the best buy tables, and re-read Martin's articles. I definitely want internet management as postal would just be a nightmare for me, so Abbey is a no-go.

After all that, I'm inclined to leave my ISA with IF, take the 5% for the moment, and keep an eye out for non-transfer penalty ISA with better rates.

Am I being a fool? Is there another, better option?

All views/advice appreciated.

Thanks

Kazza242 · 3 May 2005 at 9:07PM

Jacster wrote:

After all that, I'm inclined to leave my ISA with IF, take the 5% for the moment, and keep an eye out for non-transfer penalty ISA with better rates.

Am I being a fool? Is there another, better option?

All views/advice appreciated.

Thanks

Keeping your IF ISA sounds sensible to me. The 5% offered by IF is not a bad rate of interest for an easy access "no catches" ISA. The new ISA's this year have been a disappointment in my opinion. Too many accounts now have short-term bonuses, withdrawal or transfer penalties.

Jacster wrote:

I've looked at the best buy tables, and re-read Martin's articles. I definitely want internet management as postal would just be a nightmare for me, so Abbey is a no-go.

The Yorkshire Building Society E-ISA pays 5.20% interest and like it's name suggests, it is run via the Internet.

Jacster wrote:

Having recently switched to Alliance and Leicester's current account, I ditched the plus saver (v poor) that comes with it and opened an online saver and online ISA as they were such good rates.

On reading the T&Cs for A&L's ISA, I see a transfer penaltly applies on moving funds out in the future. I haven't moved my funds yet - still with IF.

It's a shame you have already opened an A&L ISA this tax year. This means that you can't add any new money to your IF ISA until April 6 2006. If you intend to use your ISA allowance this tax year, then you will have to put your new money into your A&L ISA and hope you won't have to transfer it next year.

Milarky · 4 May 2005 at 1:04PM

I agree that moving for a slightly better rate is not generally worth the trouble. A&L should be avoided precisely because of that fee.

With cash ISAs, the limited annual allowance makes it very difficult to justify transfers of typical amounts such as yours. But in several years time - hopefully - the accumulated balances should make it in both the banks' and savers' interests to offer more competitive rates [or am I being naive?].

It is frustrating, but ISA savings are 'long-term' and in the short term it won't be the interest rate which is as significant as the amount you can add each year. So stick with a 'good' product until a much better one comes along and in the meantime aim to save £3000 a year towards this end so you can drop in all in on 6th April [and then forget about it for 12 months]

Jacster_2 · 5 May 2005 at 8:04PM

Thanks to both of you for your advice - you confirmed what I was thinking, but I was so sure I'd missed something. I'll leave it tucked safely where it is...;)

Kazza242 wrote:

It's a shame you have already opened an A&L ISA this tax year. This means that you can't add any new money to your IF ISA until April 6 2006. If you intend to use your ISA allowance this tax year, then you will have to put your new money into your A&L ISA and hope you won't have to transfer it next year.

Is this the case? I had read on some other posts that opening an ISA didn't mean anything unless you put some money in. I opened A&L but didn't do anything with it when I read about the transfer penalty, so current A&L balance £0.

I have used my £3k this year - it's this year's allowance (05/06) that's in my IF ISA (with a wee bitty of last year's interest on top). I put it in there until I made up my mind whether or not to transfer, rather than not earning tax free interest due to indecision!

I did have £3k in last year too, but raided it in December 'cos I bought a house and needed the deposit.

Help - have I got it wrong?

ISA indecision - help please!

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free