Please could you share your expert knowledge on savings/ISA accounts?

[nondomesticgoddess]

I'm hoping someone can give me some tips as dh and I are fairly clueless when it comes to this sort of thing.

We have just moved house and as a result have £18k sitting in a current acc. The plan is to add to this and save for about two years to enable us to put an extension on the house we have bought.

We have two ISAs at the moment but gaining very little interest so i want to take what little money there is in those and add it to the £18k.

We are likely to be adding up to £1000 a month in total. There may be extra money coming in thanks to a potential bonus for dh (about £10k).

So, is the best thing to split the £18k in half and open an ISA acc in each of our names and add £500 a month to each? Or will that take us over the max amount?

And is timing important? Would it be better to get in before this financial year ends or set them up in April?

Or would a savings acc be better??

Would be very grateful for any tips! thank you!!

[ElbowFan]

I'd suggest you have a look at money supermarket.com at ISAs and savings accounts and go and have a chat to someone in a branch of one of the providers, or an independent adviser if you can find one.
Don't forget that you can only put £5k in to a cash ISA [limited as its tax free interest] in this financial year so if you've not already done it the clock is ticking. So much depends on how much access you need to the money and how often you want to add to it if you can.
Chatting to an expert may give you more options.

[DiddyMary]

If you're only looking to save for a couple of years you probably need savings accounts rather than risking the stock market. As ISAs are tax free the best ISA will pay better than the best non ISA savings accounts.

If your existing ISAs are from previous tax years then you can each put up to £5,340 in between now and 5th April. Then you can each open a new one for the new tax year, when the limit will go up to £5,640. So within a few months between you you can put in £21,960.

If your existing ISAs are paying a poor rate you can transfer them to a different provider to get a better deal, though not all accounts will accept transfers. But you need to do this as an official transfer, don't just withdraw the money and pay it into the new account.

The thing that does need some thought is whether to put money into instant access or fixed term accounts. Tying your money up for a year might get you more, but if interest rates go up it might become less attractive.


A good place to start looking is
//www.moneysavingexpert.com/savings/best-cash-isa

[CogitoErgoSometimes]

I would either do what DiddyMary suggests or put the £18000 lump sum in fixed rate, fixed term cash bonds in which you deposit your money and don't get it back for 1 year, 2 years, 3 years etc. The you could put your £500/month in a Cash ISA tax-free . The interest rate on bonds is often better than you can get with Cash ISAs but interest is deducted so you have to factor that in.

[CogitoErgoSometimes]

Should have read 'tax is deducted from interest' not 'interest is deducted'