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Q&A » ISAs
I'm currently thinking about opening my first Cash ISA, but as it's so closed to the new tax year, I was wondering whether it is worth it to wait? I have around £5000, and I assume that the ISA interest rates will be better once the new tax year starts? Any info would be greatly appreciated.
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881You have £5,000 now but will you have more before the end of the next tax year? If you will have more then you need to ISA some now anyway.
I agree that rates are likely to increase but you may as well get the benefit of an ISA now. It doesn't have to be a fixed rate. There are some reasonable rates around with instant access. You could then be getting tax-free interest while you are waiting for interest rates to rise and then transfer to a better product when one comes along.
Mike
Posted on 06 March 2011 |
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1Thanks so much for the reply, Mike. Could I ask a couple more questions just to clarify?
- I always thought that when you open an ISA, it is always for at least one year (not sure where I got this from)? So I would not be able to transfer the money into a new ISA in the next tax year?
- If I were to open an ISA now, put £5000 in it but planning to move to a new ISA the following tax year when I find a better interest rate and add more money, I would be stuck with my existing ISA unless I find an ISA that accepts transfers in right?
- If the base interest rate goes up, does this mean that a variable rate ISA should go up a little as well while you are holding it?
Posted on 06 March 2011 | Love 0 loves
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216ISA can last as long as you like .. you could transfer many times a year if you want to ... but you won't necessarily be earning interest whilst you do.
Ideally they are best left in place for a year ... but there is no requirement to.
Yes you have to find a deal that will allow transfer in ... but you only have 5100 per year anyway ... so put the 5000 in now to use this years allowance ... then you can put another 5100 during the year from april ,,, otherwise you'll only have 100 left if you do it next year.
if it is a tracking isa then yes it will rise ... otherwise it's fixed.
often they don't change the savings rates as quickly as the mortgage rates though.
also if you're not a high rate tax payer then it might not be best for you.
Posted on 06 March 2011 | Love 1 love
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1 881The rates on offer from some places for ISAs seem to be fairly close to the net rate for basic rate payers of other accounts, which is probably what was meant. Be selective.
The only rule so far as ISAs are concerned is that you can only contribute £5,100 of new money each year (indexed so it goes up annually). Transfers can occur at any time, depending on the terms and conditions of the 2 accounts.
Mike
Posted on 07 March 2011 | Love 0 loves
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