Cash ISA suggestions?

s_ridley84
s_ridley84 Posts: 3 Newbie
in Savings & investments
Hello fellow forum members,

I hope I am following protocol when asking for this advice (I'm a newbie - be gentle:o)
The information out there is quite overwhelming, but I wonder if anyone would be kind enough to give an opinion on what I should do with some money I have saved. Unfortunately, giving it to you is not an option ;) (nice try!) - I'm thinking of a fixed 1/2 year cash ISA, and my main thought is when to open that account. Here's the gist:

- I'll have £3600 in April
- £6000 in May
These are savings from regular savings accounts and not ISAs (so not concerned with an ISA transfer).

Would it be advisable to open a cash ISA before end of April 2018 (looking at one that has a nominal opening balance requirement), with the ability to make subsequent deposits of the above amounts? OR shall I just wait until the combined funds are available (around May/June) and then open a cash ISA account with that total amount?

Thank you in advance for any advice/guidance offered :)
Sian
«1

Comments

  • MallyGirl
    MallyGirl Posts: 6,617 Senior Ambassador
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    why do you want a cash ISA - the rates are pretty dire?
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  • Riff_Raff
    Riff_Raff Posts: 38 Forumite
    First Post First Anniversary
    The ISA allowance this year is £20,000 so unless you're expecting a load more cash in the near future, the timing doesn't really matter to you.
  • s_ridley84
    s_ridley84 Posts: 3 Newbie
    This is true - I'm a higher rate tax payer so thought this has a bearing on choosing ISA over savings accounts?
  • tripled
    tripled Posts: 2,879 Forumite
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    As a higher rate tax payer the first £500 of savings interest per year is tax free.
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
    If these are all your savings then you won't pay any tax on the interest.

    Even if you do earn interest above £500 you may still find keeping the money in a non-ISA account is better. You'll need to do the sums, but the best one year savings bond at the moment is paying 1.9%, whereas the best cash ISA is paying 1.46, so you are still likely to be better off with a non-ISA account.
  • Paul_DNAP
    Paul_DNAP Posts: 751 Forumite
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    It is difficult to answer with any certainty as it will come down to the T&C of the individual product or provider you choose to open your ISA with, in particular for fixed term deals.


    So what I'd do would be to choose the best rate fixed ISA out there (I am sure there is a handy website somewhere that lists these!) and then go directly to them and ask the question "If I open this now can I add more funds in May?" - the answer to that answers your OP question.


    As has been said, being a higher rate tax payer only comes into bearing if you're earning more than £500 income from savings interest a year, as you'll pay income tax on anything over £500. If you're nowhere near that level then you probably don't need the tax-free wrapper yet, so just pimp it out for the best rate for the fixed term you want. Unless of course you're planning on building your savings up in leaps and bounds to a decent amount, in which case having some in ISAs will help delay the day when you start tickling the threshold, but then you could always just wait start moving funds over when you come nearer to that. (e.g. £25k earning 2% would put you at the £500, so when you get to that you could shift £20k into ISA using up one year's allowance alone.)


    Of course you don't need to put both funds into the same place, you could mature one into an ISA and one into a fixed rate saver or a high interest current account.
    (Although I could be wrong, I often am.)
  • s_ridley84
    s_ridley84 Posts: 3 Newbie
    Thank you to everyone. This has been really helpful indeed. I'll start looking at my options now :)
  • jimjames
    jimjames Posts: 17,611 Forumite
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    Cash ISA suggestions? - don't get one!

    I've got more savings than the numbers mentioned and none of it is in a cash ISA. I'm getting a rate that averages around 4.5% fully FSCS protected outside a cash ISA
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    jimjames wrote: »
    Cash ISA suggestions? - don't get one!

    I've got more savings than the numbers mentioned and none of it is in a cash ISA. I'm getting a rate that averages around 4.5% fully FSCS protected outside a cash ISA
    That's a very impressive average interest rate. I know Nationwide Flex Direct pays 5% on £2,500 for each account, but I didn't think anywhere near that sort of average interest was possible for significant cash balances. I'd be interested to know the maximum you can have in cash savings that will give you average interest of 4.5%.
  • dqnet
    dqnet Posts: 308 Forumite
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    Audaxer wrote: »
    That's a very impressive average interest rate. I know Nationwide Flex Direct pays 5% on £2,500 for each account, but I didn't think anywhere near that sort of average interest was possible for significant cash balances. I'd be interested to know the maximum you can have in cash savings that will give you average interest of 4.5%.

    Me too..! :)
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