ISA Dilemma - advice sought

David_Drummond wrote: »

Dear Friends


I have carefully read all of the advice articles on MoneySavingExpert about Fixed ISAs BUT I am a bit confused. My problem is this: my Fixed Rate ISA with COVENTRY is about to mature and I am wondering what to do next.



The Coventry has offered me another Fixed Rate at 1.75% AER fixed until Nov 2021 which seems pretty good compared to others. BUT I am wondering whether to stay with Coventry or jump ship and transfer - but if so, where to? Is 42 months too long, given the volatility of the interest rate situation at the moment? Your sage advice would be very welcome. Thank you!

I switched my cash ISA's to stocks and shares years ago, have you considered equities?

David_Drummond wrote: »

The Coventry has offered me another Fixed Rate at 1.75% AER fixed until Nov 2021 which seems pretty good compared to others. BUT I am wondering whether to stay with Coventry or jump ship and transfer - but if so, where to? Is 42 months too long, given the volatility of the interest rate situation at the moment? Your sage advice would be very welcome. Thank you!

You can get standard (ie non-ISA) 1yr fixed rates higher than that - and as long as you earn less than £1000pa in taxable interest, there's no tax to pay.


NS&I are offering 1.95% over 3yrs (and you get "fixed-rate ISA" like access...), so again, as long as your interest (from all non-ISA accounts) is below £1000........

My wife happens to have an instant access Cash ISA that pays unusually good interest rates and is a Flexible ISA. She's instructed the transfer of her money to that. It will now form part of our emergency cash fund.

I have instructed that my money be paid into a current account so that we can both contribute to a SIPP this year. Ain't I good to her?

Put otherwise, start by identifying your purpose.

Dazed_and_confused wrote: »

The £1000 only applies if you have sufficient other income, lots of lower earners cannot benefit from this.

You need to have (current tax year) at least £16,850 of other income before the Personal Savings Allowance can be of any use to you.

True, but then either way you'd still pay no tax on non-ISA interest.
Such lower earners do not need to be able to benefit from the PSA, as they are already paying no tax on their interest.

The point is that there is little incentive for most people (not all), to use a Cash ISA now.....you can get better rates from non-ISA accounts and still pay no tax on the interest......there are some, those who have over £16850 of other taxable income and then earn over £1000pa in non-ISA interest (or would), who may still benefit from using Cash ISAs for cash accounts....(and for clarity higher rate taxpayers only get £500 PSA, and Additional rate get no PSA).




PS - Fixed rate Cash ISAs do have one potential benefit, in that you can access the cash at any time (albeit at a penalty)....however that's why I mentioned NS&I, whose Guaranteed Growth Bonds have a similar clause (unlike many fixed rate accounts/bonds)