ISAs - are they worth it ?

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Soldato
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Hi all,

With the tax year nearly coming to and end, I'm starting to wonder whether or not ISAs are worth it.

If I put 5k into a Halifax ISA account (direct reward at 3% AER) I'd make about £150 in tax free interest per tax year.

This doesn't seem like much considering the hassle I've read about between transfers of ISA accounts..

For example if I invest in Santander at the top rate of 3.30 % AER that variable rate would drop to 0.5 % AER in the following tax year which would involve hassle in applying and transferring to another account. Is the interest accrued worth it?

Are there any other bonuses I'm missing?
 
In my opinion. No !

I used to be an avid fan of ISAs - and saved in mine and the wifes for a good few years.

Then the banks / Building Societies (Nationwide in particular whos fixed ISA pays a paltry 3.1% and cash ISA now pays 0.25% ????) decided to screw everyone over and reduced the rates to percentages where it was hardly worth locking your money in.

As you can guess - I took all the saved money out of our Local Building Society & I now get virtually the same rate in our local Credit union - and I can get at the money whenever I want without having to jump through hoops. Most importantly it isn't making some board member/chief or dirty rotten banker some hefty bonus.
 
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I always set one up, I earnt a similar amount last year and had the ease of access should i need it. I have other longer term investments but use the ISA as my emergency funds.
Why do you need to transfer? in april just sign up to a new one?
 
if you have debt pay that off

otherwise ISA, but they drop the interest down so keep an eye on the interest they give you..

I have 6 and the dropped 3 down to 0.8% so I took the money out and paid off part of the morguage...
 
Unless you can find a savings account with a higher interest rate (post tax) then of course it is worth it. (unless you want to save/invest in other ways)

It isn't a big deal to transfer an ISA, you need a new account that allows transfers in then you just fill in a form and hand it to the bank, then just wait.

Each year you just need to check which bank has ISA interest rate, as you've mentioned they can change after 12 months.
 
Cash ISA's? No imo, the current rates are not attractive.

S&S ISA's? Yes. Obviously it has greater risks, but the potential rewards are far greater. A lot more effort needs to go into this option so it's not for everyone.

But if your willing to put some time and effort in you can do so much more with your money than what the banks are offering to give you.
 
I always used to max my cash ISA allowance, this year I decided to sod it as a decent return just isn't there. So instead I invested in a stocks'n'shares ISA (didn't have to wait for the next tax year either). All I'll say is so far I'd have been better sticking it in the cash ISA for 0% interest :p Hopefully in the long term it'll recover though...
 
Most of my savings is in the Post office at 1% above RPI currently, I have one 5k ISA at 2.75% but obviously that is making no return. I will pull the plug on it when it is due unless rates increase significantly in April.
 
Imo even cash ISAs are worth it. If you want to put some money by for emergencies then there are few better places, as long as you're prepared to keep switching as the rates move (this isn't difficult tbh). Don't be the lazy guy that the banks rely on to make money from.

If you wish to have £5k sitting somewhere on easy access in case your boiler breaks or something, but in reality you probably won't touch it, then I can't think of many better zero risk places to put your money.

Also the interest is tax free year after year, so if you saved £5k every year until you retire the compounding would mean that the interest would be significant, even if rates were low. Not to mention the fact that allowances will inevitably increase.
 
ISA's also need to be viewed long term, interest rates will not remain low forever and what your doing each year is building up your investment don't forget if you take it out you can't put it back in. they also become more important as your career progresses as if you move into the higher tax bracket the saving through being tax free is even greater and all that money you squirrelled away in the early years inlcuding the interest is also covered.

I only ever have one ISA and move it around as necessary each year allthough I've been reasonably lucky with not having to shift it too often to get an ok deal. Shifting it around really is easy and there is always one or two institutions offering good rates with a transfer in option.

You can certainly get better returns elsewhere but without putting you initiall investment at risk it is pretty difficult to beat the rates once the tax implications are factored in.
 
I just moved my 8K ISA into my Offset Mortgage account - Saving me £20 a month thather than the £8 I got interest on it.
 
Take your £5000 - open a stocks and shares ISA, but a gilt with your 5k and get 4.5%, no hassle. Also the gilts are generally trading at ~98p so you make a bit extra when you sell, assuming you keep it for a while.
 
If you can find a savings account with better return - after tax - then use that. However, ISA's are great and not at all difficult to set up or move about. Moved mine to the Halifax recently. Filled in a one page form [5 questions or so] and a couple of weeks later I got a letter saying my ISA had been transferred etc. They even covered the interest I would have earned if my money had magically been in my new ISA the day I applied.

Getting money out of most ISAs isn't difficult either.
 
jamief said:
Take your £5000 - open a stocks and shares ISA, but a gilt with your 5k and get 4.5%, no hassle. Also the gilts are generally trading at ~98p so you make a bit extra when you sell, assuming you keep it for a while.
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more info please? i have an ISA but it's performing poorly, this sounds like a better option
 
I've got a brief maths lesson for you:

£150 > 0

If you can find a return of greater than £150, then go for that instead, otherwise see above.
 
i used to have one years ago in an abbey acount and even alittle interest is more than nothing at all, but i needed the money so i closed it down a few years back but ive opened another one 2 months ago and i will be keeping this one open. its the santander flexible isa which was at 2.80% when i opened it so it looks like its gone up abit.

Just on a side not chaps i know my mum opened one with santader around the same time as me (January time) and i think it was the Direct ISA which was at 2.75% but the website hasnt got it listed now all i can see is 2.50% for 14k+ my mum put just over 11k in so i was wondering her isa wont of changed to this 2.50% one would it? the advisor said your on the plan for 12months then come in and have a review
 
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