Barclays ISA to plummet on 23/9/15 - where to move to?

Barclays ISA to plummet on 23/9/15 - where to move to?

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Trailhead

Original Poster:

2,628 posts

146 months

Sunday 19th July 2015
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Barclays have written to me to tell me my ISA rate will drop to 0.8% from 23 September.

I have around £30k in ISA savings and wonder where to put these, given the new Barclays rate is so rubbish.

From reading about there are lots of better paying current accounts but they all have rather low savings limits plus you have to have direct debits etc.

Who does everyone else save with? I am wondering what to do....

Virgin money do a 1.51% ISA which is my current "top" choice I think. Or the Santander 123 account, but that's not tax free.

Ozzie Osmond

21,189 posts

245 months

Sunday 19th July 2015
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Everyone's situation is different.

What's your top rate of tax? If 20% you are definitely wasting your time in a cash ISA. If 40% you are probably wasting your time in a cash ISA. That's because the tax relief on sod all is .... sod all.

You can get about 1.5% in an online savings account outside the ISA - for instance with Saga Savings - if you just want a savings account. Use the ISA for Stocks & Shares by buying one of the mainstream equity funds. You should see returns of about 7% a year compound although there is no guarantee and you need to be in for the long term.

Just IMHO....

Ozzie Osmond

21,189 posts

245 months

Sunday 19th July 2015
quotequote all
Here's a link to some online instant access savings accounts outside ISA

http://moneyfacts.co.uk/savings/easy-access-saving...

Or if you insist on doing a cash ISA you can get up to 2.5%

http://moneyfacts.co.uk/isa/best-cash-isa/

droopsnoot

11,810 posts

241 months

Monday 20th July 2015
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The only problem with getting the money out of that tax-free status is you can't put it back, so that £30k represents a few years' of ISA allowance that you'd sacrifice by moving it to a current accoutn. If you take the view that hopefully the rates will come back up again, you may then regret having lost that status. I'm in a similar position with two Barclays ISA accounts, with a smaller total balance, but it's dropping from 1.38% which isn't that spectacular to start with, so your annual change is £174.

Trailhead

Original Poster:

2,628 posts

146 months

Monday 20th July 2015
quotequote all
droopsnoot said:
The only problem with getting the money out of that tax-free status is you can't put it back, so that £30k represents a few years' of ISA allowance that you'd sacrifice by moving it to a current accoutn. If you take the view that hopefully the rates will come back up again, you may then regret having lost that status. I'm in a similar position with two Barclays ISA accounts, with a smaller total balance, but it's dropping from 1.38% which isn't that spectacular to start with, so your annual change is £174.
Exactly this. Ideally I want to keep it in a tax free wrapper.

Virgin money are doing 1.51% so I might transfer it all over to them.

Ozzie Osmond

21,189 posts

245 months

Monday 20th July 2015
quotequote all
Trailhead said:
Ideally I want to keep it in a tax free wrapper.

Virgin money are doing 1.51% so I might transfer it all over to them.
Accumulated savings, say, £10,000

Interest rate, say 1.5% p.a. = £150 interest a year

Tax saving for a 20% taxpayer = 150/100 x 20 = £30 p.a. Very small amount.

IMO this is a complete waste of the very valuable ISA tax privileges. If you have the stomach for some proper investing,

  • Transfer your cash ISA to a stocks and shares ISA to make better use of the tax relief. (hopefully)
  • Do your cash savings outside of ISA.

Ozzie Osmond

21,189 posts

245 months

Monday 20th July 2015
quotequote all
Ozzie Osmond said:
Or if you insist on doing a cash ISA you can get up to 2.5%

http://moneyfacts.co.uk/isa/best-cash-isa/

Mattt

16,661 posts

217 months

Monday 20th July 2015
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Would you consider stocks and shares?

trowelhead

1,867 posts

120 months

Wednesday 22nd July 2015
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Mattt said:
Would you consider stocks and shares?
This. Whack it into a nice passive tracker fund. Vanguard are great - esp. their lifestrategy funds. Job done. Expect 6%-8%+ p/a over the longer term.

I used to save in cash isas but it is a waste of time with current rates. How anyone can get excited over a 1% return is beyond me.

Raise your risk tolerance, you'll soon wonder why you ever accepted such meagre rates.



Edited by trowelhead on Wednesday 22 July 14:52