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Consolidating existing cash ISAs into one. Regardless of interest rates, which banks are best avoided and which are fairly 'safe'?

(16 Posts)
Scrumplet Thu 04-Jun-09 10:51:29

I plan to consolidate two cash ISAs (with now worse than pathetic interest rates) with cumulative payments of about £10k into one new ISA. Abbey, Lloyds TSB and M&S seem to be coming up trumps on Money Supermarket. People in the know WRT bank stability, please let me know if these would be fine to go with - and if there are any banks I should definitely avoid. Ta.

CuppaTeaJanice Thu 04-Jun-09 10:55:02

I think all British banks are covered by the government for £50,000 for each person, so your 10k should be safe whichever one you choose. Not sure about foreign banks, though - maybe best to avoid Iceland!!!
www.moneysavingexpert.com explains it in more detail.

CuppaTeaJanice Thu 04-Jun-09 10:58:31

Oh, and make sure you transfer the money rather than take it out and pay it back in somewhere else, otherwise you'll lose the tax benefit. smile

Scrumplet Thu 04-Jun-09 11:09:03

Thanks, Cuppa. I do want to transfer, yes. Barclays (with whom I have one of my existing ISAs) have a newer ISA with a better interest rate, and I'm not allowed to transfer into it. They were trying to persuade me to take my money out and pay it into the new one kind of starting all over again, IYSWIM. Bloody ridiculous. Defeats the object of accumulating tax-free savings.

Will check out www.moneysavingexpert.com.

Voltaire Thu 04-Jun-09 11:23:13

Scrumplet - Cash ISAs are rubbish as interest rates are so low. Do you have a mortgage? If yes, have you thought about getting an offset mortgage?

If not and you want to keep the savings separate, why don't you transfer the Cash ISAs into a stocks and shares ISA? You will earn a far far greater return on your money. A lot of experts are calling the bottom of the market now and there are big profits to be gained as we climb out of recession. I have my S & S ISAs with Hargreaves Lansdown and they are excellent and v reasonable.

Scrumplet Thu 04-Jun-09 11:36:32

Thanks, Voltaire. I do have a mortgage, yes, but currently shared with ex. Hope to get it in my name eventually, but if it happens at all, won't be until the end of the year. Don't want to tie up my own money with something he co-owns. But worth considering in the future, as when we agree the division of our business assets, I hope to have a reasonable lump sum.

I don't want my money to be tied up/inaccessible. I'm unlikely to need it, but life has been unpredictable in recent years, and it's difficult to know exactly where it's going TBH - so I'd like my cash handy, just in case. Can it still be handy in a stocks and shares ISA? (Bit of a novice here. )

Thanks for advice.

Voltaire Thu 04-Jun-09 12:42:36

I could sell my stocks and shares within my ISA in the next 10 minutes and then have some or all of the money transferred to my bank account within the next 3 days. Is that accessible enough for you? grin

Lots of people are scared of self invested stocks and shares. They shouldn't be. If you can Mumsnet, you can run an online ISA portfolio. You will have marvellous fun with it, will learn a lot and if it doesn't earn you 10X the interest you would get from a CASH ISA in the forthcoming year, I will eat my hat. grin

My £7,200 ISA allowance invested in April is now worth £12,210 for example.

DaisymooSteiner Thu 04-Jun-09 17:14:22

Do you have any links to information on how to get started with a self invested stocks and shares ISA? How much of your time does it take up?

Lilymaid Thu 04-Jun-09 17:23:20

Isn't there an overall limit, now of £10,200 for any one cash ISA? Coupled with the fact that you can only open one cash ISA in any tax year, would there be any benefit to consolidating?

Voltaire Thu 04-Jun-09 18:19:23

DaisyMoo Within an ISA you can only invest in FTSE 250 or 350 companies anyway. You are not allowed to invest in AIM shares as they are considered too risky. So a lot of the risks are taken away for you. I'll root round for a guide for you.

Lilymaid ISA limits here You can keed adding to the one cash ISA (up to the tax free max each year) or you can have several different accounts. You can convert cash ISAs to S & S ISAs but you can't convert S & S ISAs into Cash ISAs (because the tax free limits for cash ISAs are less). Interest rates are so low that it's hardly worthwhile having an ISA at the moment. And certainly not cost effective if you have an outstanding mortgage (the mortgage interest is bound to be more than the interest you earn on your cash ISA)

EachPeachPearMum Sun 07-Jun-09 11:52:44

With a S&S ISA, can you transfer to a cash ISA acc later if the amount is less than 3600?

Swedes Sun 07-Jun-09 17:13:23

EPPM - You can't convert S & S ISAs into Cash ISAs.

EachPeachPearMum Sun 07-Jun-09 20:46:48

So how do you keep your investment intact when S&S start to plummet again? (bearing in mind my age- there is llikely to be another crash before I want to cash mine in...)

Swedes Sun 07-Jun-09 21:15:38

EPPM You can sell shares within the S&S ISA and sit in cash. You earn interest on the cash.

EachPeachPearMum Mon 08-Jun-09 06:48:03

Ah.... thank you smile

EachPeachPearMum Mon 08-Jun-09 17:36:18

scrumplet I meant to say, sorry, that NatWest have good transfer rate- I think it's 3.1% atm... not sure what the ones you looked at were...

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