Are Cash ISA's worth it right now?

rossk26 · 8 Oct 2013 at 13:43

Mr-White said:
Ouch, because I opened my ISA pre 2013 I'm getting 2.75%, ISAs opened this year only recieve 1.7%

MW

I've got 3% on my 2013/14 ISA, you just need to shop around.

TommyV said:
I've been saving hard since end of march and have enough for a couple of ISA's (all of which is the intention of being a house deposit), but surely there is no point for a short 6 month period? Any alternatives, apart from putting it all on red?

Depends how much you've got? You're not going to make that much money in 6 months with any savings account really.

Open a Santander 123 current account for ease of access and a pretty decent 3% interest rate on your current account balance if over £3k.

semi-pro waster · 8 Oct 2013 at 13:45

Neoni said:
There is much higher rate of return options out there, but how legitimate are they? and how safe will your money be really? that unfortunately is why ISA is a safe option but as mentioned no good over short periods of time.

But worth remembering that you only get £X,XXX of tax-free allowance every year for savings so if you are considering over the longer term and assuming that the economy (and interest rates) pick up then it might be a valuable option to keep putting into the ISA to build up the tax-free amount you hold.

Whether it's worth it is up to you and you're right to evaluate based on the timeframe you care about but it's certainly not always a clear cut issue even if you think it is here.

R.O.S.S.I · 8 Oct 2013 at 14:14

Right sorry to hijack a thread here but can someone just explain how something works in the land of ISA's......

What are you supposed to do with an ISA that comes to the end of its good fixed rate if you've already maxed out another ISA in the year it ends?

Are you supposed to just do nothing and let it accrue naff all interest or are you free to move it to something with higher interest? Does it not matter that i've already maxed out my ISA limit already or is that just a limit for opening new ISA's and doesn't affect transferring?

I only ask as my 4.1% ISA with Santander comes to an end next Sept and i'll be wanting to open a new one after April again next year so wasn't sure what the situation would be?! Want to make sure they are all accruing as much interest as poss!

R.O.S.S.I · 8 Oct 2013 at 14:19

Jesus, can't believe how crud the rates are at the moment too. I thought the 4.1% I was getting was poor.

platypus · 8 Oct 2013 at 14:22

It's only worth it for the headline rates, and if you move it every year to get a reasonable interest rate.

[TW]Fox · 8 Oct 2013 at 14:48

Neoni said:
Exactly my point, i realise i made a brief post on it, but the return for me over 3-5 years is pointless..

i lost my interest when i closed my cash isa, if you are comfortable knowing you cant touch that money without being penalised then go for it, but for me it isnt a quick enough return

What and premium bonds are? Ridiculous posts. Whether there is any penalty for talking cash from an ISA depends on the product, plenty don't penalise.

Your suggestion of premium bonds is laughable.

rossk26 · 8 Oct 2013 at 14:50

R.O.S.S.I said:
Right sorry to hijack a thread here but can someone just explain how something works in the land of ISA's......

What are you supposed to do with an ISA that comes to the end of its good fixed rate if you've already maxed out another ISA in the year it ends?

Are you supposed to just do nothing and let it accrue naff all interest or are you free to move it to something with higher interest? Does it not matter that i've already maxed out my ISA limit already or is that just a limit for opening new ISA's and doesn't affect transferring?

I only ask as my 4.1% ISA with Santander comes to an end next Sept and i'll be wanting to open a new one after April again next year so wasn't sure what the situation would be?! Want to make sure they are all accruing as much interest as poss!

You can only open a cash ISA with one provider in a tax year.

However you can transfer old ISAs to a new provider as well. But make sure you are paying into the correct ISA account!!

Neoni · 8 Oct 2013 at 14:51

[TW]Fox;25078493 said:
What and premium bonds are? Ridiculous posts. Whether there is any penalty for talking cash from an ISA depends on the product, plenty don't penalise.

Your suggestion of premium bonds is laughable.

Not when you put 10-30k in it isnt.. its a risk but the return could be anything from £1 a month upto what 1mil... have a friend who has 30k in premium bonds wins around £100-200 a month.

The bank even advised me not to invest into anymore isa's as the rate of return is so poor.

Make · 8 Oct 2013 at 14:54

Neoni said:
Not when you put 10-30k in it isnt.. its a risk but the return could be anything from £1 a month upto what 1mil... have a friend who has 30k in premium bonds wins around £100-200 a month.

The bank even advised me not to invest into anymore isa's as the rate of return is so poor.

And I know people who have not won anything in years.

It's a gamble, it is not saving.

Not to mention, if you have the max. amount of money in them, you lose compound interest.

Rapier · 8 Oct 2013 at 14:54

R.O.S.S.I said:
Right sorry to hijack a thread here but can someone just explain how something works in the land of ISA's......

What are you supposed to do with an ISA that comes to the end of its good fixed rate if you've already maxed out another ISA in the year it ends?

Are you supposed to just do nothing and let it accrue naff all interest or are you free to move it to something with higher interest? Does it not matter that i've already maxed out my ISA limit already or is that just a limit for opening new ISA's and doesn't affect transferring?

I only ask as my 4.1% ISA with Santander comes to an end next Sept and i'll be wanting to open a new one after April again next year so wasn't sure what the situation would be?! Want to make sure they are all accruing as much interest as poss!

Find an ISA provider with a product with a good rate that allows transfers in. Open an account with that provider and then use an ISA transfer form to move the money to the new provider.

The fact you have maxed your allowance for this year has no impact on your ability to transfer previous years allowances.

Azza · 8 Oct 2013 at 14:55

Neoni said:
Not when you put 10-30k in it isnt.. its a risk but the return could be anything from £1 a month upto what 1mil... have a friend who has 30k in premium bonds wins around £100-200 a month.

The bank even advised me not to invest into anymore isa's

MSE mode

He must have above average lucky, what if Redgie isn't a very lucky guy.

/MSE mode

Your situation could well be vastly different to Redgie, especially since he has no mortgage to pay.

Neoni · 8 Oct 2013 at 14:56

Make said:
And I know people who have not won anything in years.

It's a gamble, it is not saving.

Not to mention, if you have the max. amount of money in them, you lose compound interest.

I never said it wasn't but for me to be sat on a ISA for what 3 years to make i dare a small amount back, really isn't worth it, i could invest that into other areas and make double what i make back on an ISA

Like above has said, everybody situation is different, i cant advise anybody what to do with their money, this is purely my opinion

rossk26 · 8 Oct 2013 at 15:06

With £30k in an ISA, you'd NET £600 a year, which will only compound and increase year on year. Interest rates are bound to improve as well, so you're missing out by not topping up your free allowance when you can.

Theophany · 8 Oct 2013 at 15:10

Neoni said:
Not when you put 10-30k in it isnt.. its a risk but the return could be anything from £1 a month upto what 1mil... have a friend who has 30k in premium bonds wins around £100-200 a month.

The bank even advised me not to invest into anymore isa's as the rate of return is so poor.

Premium bonds offer appalling returns, which are covered up by the 'lottery' aspect, which is an absolute joke. If you're seriously peeved about ISA returns, Premium Bonds are nothing but a sidestep (backward step imo, but I'm being kind) that blind you to reality with the 'what if' chance of winning a million quid (which, by the way, is paid for by giving everybody horrendous return on investment).

Also, the example of your friend is bs. The odds simply do not add up. He's more likely to be winning ~£300 p/a based on £30k in Premium Bonds. Source.

rossk26 · 8 Oct 2013 at 15:17

Theophany said:
Also, the example of your friend is bs. The odds simply do not add up. He's more likely to be winning ~£300 p/a based on £30k in Premium Bonds. Source.

I just literally used that tool

The result was

With the same amount in Premium Bonds, there's a 91.4% chance you'll earn less than this.

Those odds don't look very appealing!

Neoni · 8 Oct 2013 at 15:20

Theophany said:
Premium bonds offer appalling returns, which are covered up by the 'lottery' aspect, which is an absolute joke. If you're seriously peeved about ISA returns, Premium Bonds are nothing but a sidestep (backward step imo, but I'm being kind) that blind you to reality with the 'what if' chance of winning a million quid (which, by the way, is paid for by giving everybody horrendous return on investment).

Also, the example of your friend is bs. The odds simply do not add up. He's more likely to be winning ~£300 p/a based on £30k in Premium Bonds. Source.

Believe what you want, she's had a very good lucky streak then obviously i've not spoken to her in sometime i'd be interested to see what shes getting if anything now, but i have no interest in ISA as said i dont see no real return, i'd rather take risks with my money and potentially come out on top, or take a small hit

the BANK also said to me that premium bonds are going downhill due the amount of people buying in.

Boycey0211 · 8 Oct 2013 at 15:22

my parents used to have around that much in premium bonds, they also thought it was 'brilliant' when they won £50 every 6 months......

Energize · 8 Oct 2013 at 15:22

ISA's aren't worth it right now as the banks are offering rip-off interest rates.

Zopa on the other hand averages returns of 5.1%.

Theophany · 8 Oct 2013 at 15:29

Neoni said:
Believe what you want, she's had a very good lucky streak then obviously i've not spoken to her in sometime i'd be interested to see what shes getting if anything now, but i have no interest in ISA as said i dont see no real return, i'd rather take risks with my money and potentially come out on top, or take a small hit

the BANK also said to me that premium bonds are going downhill due the amount of people buying in.

I think she may have been telling porkies, tbh. Financial advice that relies on lucky streaks and lotteries is no different to conducting your investments in a casino.

rossk26 · 8 Oct 2013 at 15:39

Energize said:
Zopa on the other hand averages returns of 5.1%.

Is that after tax, fees and bad debts?