ISA or Monthly saver?

Question

I'd like to put aside some money every month (under £250) - would I be better off with an ISA or a monthly saver? Have seen alliance and leicester do monthly savers with 12% apr but would I get taxed loads on this? Would it still be better to have a tax-free Isa instead even though they have lower apr's?

Answer 1

well it depends....

like others have advised an isa is tax free and u have a maximum per tax year of £3000 which is what your monthly amount would add upto, or just under 3000 if your payin less a month, however once you have met the max (say u win some money somewhere and take your isa to the max) then u CANNOT open another in that same tax year, and yea u will have instant access to the money (unless its a notice account ie 30 days notice required to withdraw) but once u take it out u cant put it back in till the following tax year... can you be that strict to put it in and leave it in?

on the other hand the monthly savers normally have a catch on them. yeah the interest rate is about twice if not triple a normal account but in the small print they say that if you withdraw cash from the account you do not recieve interest for that month at all which is £30 on 250.00. but thats before the tax even then its still more.

you have to weight it up....

account with a max amount, instant access and no tax

or

high interest, instant access, but interest not paid at all should u make even the smallest withdrawal.

spea to your financial advisor at the branch of your bank ant they will be able to help, some accounts give you higher interest (not as high as 12% mind you) but let you withdraw x amount of times within ever 3 months or every six month for free then chg you a small fee like £1.50per withdrawl but you still get the interest each month.

hope that helps

Answer 2

The maximum amount you can put into a mini cash ISA is £3000 per year. As you intend saving no more than £250 a month (which adds up to £3000 in 12 months) it would be better for you to start an ISA, which gives you tax free interest. You also have access to your money if you need it. Don't expect to get interest on the whole 3 grand after a year if you invest monthly, the first month's interest will be on £250, the second month's on £500 (+previous month's interest) and so on.

Answer 3

They are not necessarily mutually exclusive. you can pay monthly into an ISA.

However, 12%, even after tax (still over 9% after tax), is much better than you could get in a cash ISA (around 5% tax free). You could make more in an Equity ISA (one that invests in shares instead of guarenteeing you a return), but then you could loose it all!

If you are only going to save less than £250 per month, than the monthly saver that a couple of banks offer is probably your best bet.

Answer 4

ISA TAX FREE! I think it's £3800 a year max to pay in If you want to pay in more open another else where.
Depends on if you want to draw from it and then pay back in? if you do your beeter off with a savings account, if you want money to just build up and not touch it always ISA,
Regards

Answer 5

Isa's are good, stick to them, but you have got a limit on your tax free amount.

Answer 6

ISA