Choosing an ISA, doing my head in, WWYD?

[YeOldeTrout]

I have £6000 in an online-access ISA, the interest rate is going down soon. I shouldn't need this money for anything else in next 5 yrs. I want to keep it in cash.

Bank-A was the best interest rate ISA I could transfer to (2.2% fixed over 5 yrs). By the time I finished the identity paperwork & login security stuff ready to merely open an account with Bank-A, it was completely out of the best value league tables for ISAs.

It's doing my head in, do I go for BankA after all or a different bank now offering a better rate, which may not be best after all by the time I get the paperwork done? They say interest rates will trend upwards so maybe I should go for something not fixed, anyway.

WWYD?

banks cannot in fact stop you withdrawing money from an ISA, even a fixed rate one. They charge a withdrawal penalty but even taking that into account, you can often still do relatively well (in the current climate of real negative interest rates)

the best cash rate is currently the Coventry at 2.4% for five years. Or you could put £2k of it in a TSB classic plus account at 5% and the rest in a Club Lloyds account at 4%. Both of these are taxable but you may not have to pay tax on the interest depending on your income. Set up standing orders between the two to meet the pay-in requirements, set two direct debits from the Club Lloyds, job done. Even if you pay tax you'll do better.

As soon as I get the Coventry paperwork & login security set up... it won't be best buy any more, will it? That's what's makes me feel paralysed. I can't keep up.

Oh yeah, are Tories going to bring in that 'no tax for less than £1000 interest' plan? Coz if they do, then maybe I should skip ISA altogether.

it is in place now for those that earn less than £15,600. Income calculator here:

www.gov.uk/apply-tax-free-interest-on-savings/tax-free-savings

if this is you, register those bank accounts for gross interest payments. And yes, this may mean you don't want the ISA although the yearly allowance disappears if unused.

for next tax year, beginning April 2016, first £1000 of interest will be tax free for everyone.

I earn maybe double that.
Is that definite, everyone for April 2016? I didn't think it was in an actual announced budget yet.

Still too many choices!!

www.gov.uk/government/uploads/system/uploads/attachment_data/file/414026/Savings_factographic_final.pdf

yes, it is announced by the government.

If you dont need it, maybe get a fixed rate bond?

no, the rates on those are much less.

the current accounts are the highest rates available.

Have to have £1000 coming in each month on the current account, I think?

Not sure I'm up for playing the game of moving money around current accounts each month. I know Martin Lewis talks about that game, though.

you don't need that much as income, you just set up standing orders so the same money goes back and forth between the accounts.

it's not a game, it is a legitimate way of getting interest in the present very tough times for savers.

your call. Feel free to get paid much less interest if you prefer. 2.5% on £6k is £150. 5% is £300. It will take you a couple of hours to set up the current accounts. Happy to work for £75 an hour? I am! (and that's just year 1)