AAARRRGGGHHH...choosing where to save money

[Lmccrean]

I recently picked up "The Money Diet" in the library and think its great - never really thought about moving my bank account cause ive had same bank since i was born.

Now, because I have turned a blind eye to it all previously I am very very confused and rather overwhelmed by all the options. (site isnt helping much)

At the end of the year, I will have £2000 to put into savings -its towards a mortgage deposit, so dont need access to it for at least a year.

Thing is - I dont know where to put it...ISA (best ive found is 5.5%), or Childrens Regular savers account,(best at 10% for a year, and no tax to pay as long as the interest earned is less than £100) then there is an an adult regular saver (best at 10% for a year).

Is it better to
a) put all money into a kids saver account, and pay tax
b) put only enough in the childs saving account before it gets taxed, and put rest somewhere else? (if so, where)
c) put all money in ISA?
d) some other option....

Im soooo confused

And can someone explain what gross interest is?? says you can get money back on tax paid to kids...but read gov site and hasnt really helped me

do you pay tax yourself?

yes, i do

I would put it all in an ISA, as i am pretty sure the 10% advertised for the children's account is only for a maximum of £100 pcm, which over the space of the year equates to much less. Besides as a parent you can only put up to a certain amount in your child's account per annum. Any interest earned by the child over £100 (if the money was given by the childs parent)is then taxed. Its a form of safeguard for parents to not shelter their money in what was originally designated as a children's bank account. The cash mini isa's are usually instant and you can look at a website like www.thisismoney.co.uk for the latest table charts. Good luck !!!

pcm???

ok.. ISA at 5% but no tax, or regular saver at 10% with tax? at what rate do you get taxed anyway?

I think motley fool advises that everyone should use their ISA limit and your proposed savings falls within this. Motley Fool

pcm = per calendar month.

thanks ladies! looking at the motley fool site now.

Have one more thing...20% tax is only charged on the interest on the account?? (unless its an isa)

depends on what tax you normally pay on your wages. basic rate taxpayers pay 22% income tax, but 20% tax on the interest on savings. if you are a higher rate taxpayer you'll pay 40% tax on the interest earned.