Cash for ISA Questions

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Cash for ISA Questions

Let me be very clear – I LIKE CLIENTS TO HAVE CASH… its VITAL. The real question is “what is a sensible amount of cash to hold?” This will be different for everyone. Cash should really be available for planned expenses within the next 0 to 3 or 4 years, that way you know its there ready for your use. Thereafter, cash is vital to run any business and any personal finances. Whilst budget calculators and spreadsheets suggest nice neat twelfths, many costs are not monthly. As thoughts turn to Christmas – this is something we all know happens annually, once the presents have been unwrapped and you start looking forward to the potential of the new year, thoughts turn to summer holidays… and so on. So having cash on deposit is a very good and wise thing and don’t forget that some expenses are unplanned – such as repairs or replacements due to loss or damage.

Interest rates are so low is it worth bothering with a Cash ISA?high_and_low

The short answer is “maybe” – it rather depends on your circumstances and when you need the money. Sadly, despite ISA allowances never being higher, interest rates haven’t been lower in living memory. Many if not most, deposit accounts are paying less interest than the rate of inflation (1.3% according to ONS). So your pound is declining, slowly, in purchasing power. This is an unfortunate reality that we currently live with. I would also take issue with official figures about inflation which bears little resemblance to the spending patterns of various people (think of the price increases in gas, electricity and rail).

Just to be clear… what is a Cash ISA?

A Cash ISA is simply a deposit account where interest is tax-free. Interest is taxable normally and should be reported on your HMRC self-assessment tax return. The amount you can put into a Cash ISA is linked to tax year allowances and the ISA rules (all of which are within our free APP or you can look them up). These changed in July 2014, lets stay brief and current, the new allowance is £15,000 each for the current tax year. You can now hold all of the allowance as cash or as investments, or any combination between the two within an ISA (previously you could only contribute 50% of the ISA allowance towards cash). As a result of the new rules, you can have a more suitable balance between cash and investments within your ISA to suit your requirements.

Should I just pick the best rate?

A word or warning, picking a cash ISA (or any deposit account) based entirely upon the headline rate, may not be wise. Perhaps you will remember the Icelandic banking crisis in 2008, which ought to provide some cautionary tales.

It is worth the effort?

It depends on your current rate of interest within your ISA and what the alternatives are. Remember that an interest rate of 1% will be worth 0.8% to a basic rate taxpayer and 0.6% to a higher rate taxpayer. Within an ISA you get the full untaxed amount. However if the sums are small or modest, say £10,000 then shopping around for an extra 0.5% is only going to provide £50 over a year, which given that if the better new rate is with a different Bank (or Building Society) you have to go through the ususal opening an account procedures – demonstrating your identity and UK residency and so on.

If this cash is just a part of my portfolio, should it now be mixed within my investment ISA?

Maybe. If you have a modern investment ISA on a “platform” which holds lots of funds, shares etc, then the platform may well have cash deposit options too. However be warned that platforms generally charge for their adminstration based on the balance on it, so you may well (probably) get charges for cash holdings too. If its ok at your Bank/Building Society then as long as your adviser knows that you have it and therefore not “too much” in cash, that should be OK. However for long-term wealth I would encourage people to use an ISA as an investment vehicle, rather than a place to dump cash as savings. Context is everything and needs thoughtful assessment with an adviser.

So where can I find current ISA rates?

Try looking here at Moneyfacts. However, I suggest doing a proper search using their search engine or any other that is widely available. Remember fixed rates are lock-in’s. If you think rates will rise, then you may wish to question the wisdom of locking into a low rate that is fixed for ages and if you are really locking away cash for 4 years or more, then perhaps you should be thinking about investment instead.

Anything else I should know?

Well, the age old one about bias. Financial advisers and financial planners like me are in part remunerated based upon the amount of money we look after, so if you invest more, we earn more. Of course the hope and expectation is that this is a very worthwhile exercise for you – getting better returns etc (but more importantly getting your money right for you). However it needs to be clear that its not free. Of course a Cash ISA with a Bank/Building Society can appear free – there are rarely any charges, but that doesn’t make it free. This is part of the problem with the delusion that the retail banking system maintains – that banking is free. It isn’t. The bank invariably pay bonuses to their staff for new accounts opened.  They lend the money back out at far higher rates of interest and make profit as a result.  However that money is at risk (of not actually being repaid to the Bank) and possible Bank collapse – hence the £85,000 FSCS protection and of course there is the inflation to also consider, you may actually be losing money – as many people are if their rate of interest is less than the rate of inflation (which is the majority of current accounts and many savings accounts).

A final point – this (the above) is not advice. You should naturally always plan with your own goals and context. A Cash ISA can be a very good tool in your financial box, but it may also be a rather blunt instrument – it all rather depends on the job at hand and the degree of skill you have using it. Here is a decent little video from Nationwide which is pretty clear. I’m not promoting Nationwide and depending on when you read this the information may be out of date. However the principles are right… oh yes, Nationwide do not pay me to mention them… so no cash for promotions.

I hope this is helpful.

Dominic Thomas

Cash for ISA Questions2017-01-06T14:39:33+00:00

Cash ISA rates

It has been a while since I updated information about various deposit rates. I’m providing a list here of some of the top rates available. This is not advice, just a list. Importantly with cash accounts the FSCS only cover up to £85,000 per person per bank and be warned that this really means per banking license. Many banks (and building societies) share the same banking license due to mergers. The table below shows instant access deposit accounts, then fixed and variable rate Cash ISAs.

INSTANT ACCESS  Best online  West Bromwich BS 2.30%
 Best High Street Bank  Virgin Money 2.00%
 Best Building Society  West Bromwich BS 2.26%
FIXED RATE CASH ISA  Best online  NatWest 2.30% 3 year fixed
 Best High Street Bank  Santander 2.50% 2 year fixed
 Best Building Society  Derbyshire BS 2.25% 2 year fixed
VARIABLE RATE CASH ISA  Best online  Monmouthshire BS 2.50% 30 day notice
 Best High Street Bank  Virgin Money 2.00%
 Best Building Society  Earl Shilton BS 2.70% 90 day notice

So it is important that this is checked carefully. Please also note that I am generally fairly suspicious of any bank or building society offering particularly high rates, this suggests that they need your money rather more than other banks do and this is generally not a good prospect.

Quite obviously interest rates are pretty dreadful. As RPI is currently 3.1% and CPI is now 2.7% (according to ONS figures) the above all represent below inflation rates. This means that your money devalues in real terms. In plain English – the money in your pocket is worth less due to inflation. Here is a good short video from the Bank of England about inflation with some useful historical reminders. Note that as this is a Bank of England video, whether or not the MPC (Monetary Policy Committee) has been successful or not is probably best judged by others. At the moment the Bank of England base rate is 0.50%.

Cash ISA rates2017-01-06T14:39:49+00:00

Cash ISA latest rates

Latest Cash ISA Rates

There continues to be the expected speculation about inflation and interest rates – how on earth would the media use their time if they didn’t spend so much of it guessing the future?  As we know, official inflation rates are falling, yet you and I probably pay more for the things we actually consume, strange but true. Anyway, here are some of the top rates currently available. Please note that this is simply a list, it is not advice. It is important to ensure that your funds are ideally within FSCS compensation limits and not restricted due to shared banking licenses.

Instant Access Accounts

  • On-line: Melton Mowbray 2.50%
  • Bank: Virgin Money 2.20%
  • Building Society: 2.35%

Cash ISA – Variable Rates

  • On-line: Sainsbury’s Bank 2.80%
  • Bank: Virgin Money 2.40%
  • Building Society: Earl Shilton 2.70% (90 day notice)

Cash ISA – Fixed Rates

  • On-line: Bank of Cyprus UK 3.20% (3 years)
  • Bank: Halifax 3.60% (5 years)
  • Building Society: Yorkshire 3.20% (fixed until 31 May 2014)

I have to admit that I’m not overly comfortable with a society that has supermarkets offering banking services, which probably says more about Banks than it does about supermarkets. However many people visit their supermarket more than they visit their bank. I have to admit that I prefer to visit neither and am rather an advocate of on-line service.

New ISA Allowance for 2013/14

You may wish to know that the ISA allowance is now linked to inflation and the September figure for inflation (2.20%) is used for the following tax year. So the 2013/14 ISA allowance will be £240 more. As a result the full 2013/14 allowance will be £11,520 with up to half this into a Cash ISA (£5,760).

Cash ISA latest rates2017-01-06T14:39:53+00:00

Cash ISA Rates

Time to update you on some of the top rates of interest for deposit accounts. Remember that the FSCS (compensation scheme) only covers up to £85,000. This is not advice, but a list of top rates.
2007: Economic Theory – Becker
Instant Access (taxable)
Building Society: Newcastle 2.35%
Cash ISA Fixed Rate (not taxable)
Building Society: Leek United 3.50% 3 years
Cash ISA Variable Rate (not taxable)
Building Society: Newcastle 2.35%
UK National Economy
Inflation – RPI measure: 2.90%
Inflation – CPI measure: 2.50%
Bank of England Base Rate: 0.50% 
In terms of shared banking licenses (and therefore limited FSCS protection), Virgin Money share a license with Northern Rock and Halifax is part of RBS. All of the Building Societies listed above currently have their own separate licenses. Sainsbury’s Bank also holds a separate license.
As the above figures are some of the “best rates” it is clear that cash is rarely keeping pace with inflation, making life harder for savers as the spending value of every pound reduces.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Rates2017-01-06T14:39:54+00:00

Cash ISA Update

1935: The Irish In Us – Bacon
A quick update to the Cash ISA rates. Remember this is not advice, just a list of some top rates – however you should do your own checking of the detail (I suggest looking at MoneyFacts) and remember the compensation limit of £85,000 per person per banking license.
The only real change on last week is the Post Office, who have made a bit of a play for online savings, (Issue 5) which can be accessed “24/7/365″… which is asking for trouble! Now paying 3.17% it is better than a considerable number of Cash ISAs. However, be warned that the Post Office Ltd (not the same as National Savings) is an appointed representative of the Bank of Ireland (UK) Plc. If you would like to see their latest credit report, just click here. Though be warned, the data only goes to June 2010, which is pretty useless as its nearly 2 years out of date. So be warned, if you are able to place the maximum of £2m into this account, only £85,000 of it will be protected by the FSCS.
Otherwise rates look fairly unchanged. Kent Reliance have altered their fixed rate Cash ISA to 4.00% for their 5 year fix, which is probably good for a mortgage or loan, but not for your savings – locking in for 5 years at 4% seems like a very gloomy outlook for interest rates over the next 5 years.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Update2017-01-06T14:40:02+00:00

Cash ISA Update

2010: Conflict of Interest – Manning
As usual, for the sake of the hard of thinking, I need to state that this is not advice, but a list of some of the better rates available “out there”. You should always check the detail and I recommend doing so via the Moneyfacts website as your starting point. Remember the rules about consumer protection – only the first £85,000 is covered by the compensation scheme (FSCS) and be warned that there are a number of Banks that come under the same Banking license. I would be unwise to speculate about which Banks may have liquidity problems, but a glance at the media would suggest you are more circumspect of those that from within Portugal, Ireland, Greece and Spain, which may provide you with a conflict of interest.
Instant Access Accounts
Online: Coventry 3.15%
Bank: Virgin Money 2.60%
Building Society: Nottingham 3.25%
Cash ISA Fixed Rate
Online: Bank of Scotland 3.80% (4 years)
Bank: Halifax 4.25% (5 years)
Building Society: Kent Reliance 3.75% (5 years)
Cash ISA Variable Rate
Online: Santander 4.00%
Bank: Barclays 3.05%
Building Society: Nationwide 3.50%

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Update2017-01-06T14:40:02+00:00

Cash ISA Headlines

1955: Headline Hunters – Witney
Here is an up to date list of some of the top paying accounts available at the moment. As ever, this does not constitute financial advice and is merely a list. You should always check the detail (at the risk of sounding patronising, but putting in suitable caveats to satisfy regulators and PI insurers). I suggest looking at Moneyfacts for more information, but please take care as rarely are top rates much different from anyone else’s without a sweetener of some type.
Instant Access Account
Online: Coventry 3.15%
Bank: Virgin Money 2.60%
Building Society: Nottingham 3.25%
Comment: Dreary rates, though far better than leaving the money in your current account which probably pays nothing at all. These accounts are described at instant access, but check the detail carefully.
Cash ISA – Fixed Rate
Online: Skipton Building Society 4.00% for 5 years
Bank: Halifax 4.25% for 5 years
Building Society: Leeds 4.00% for 5 years
Comment: These are 5 year rates, which are really disappointing for savers. You will be effectively locking up your money to “grow tax free” at a rate that is only just above inflation. There is in practice minimal real growth and frankly wouldn’t generate much interest to tax, so the ISA status is hardly worthwhile. Think very carefully about locking up cash for 5 years.
Cash ISA – Variable Rate
Online: Santander 4.00%
Bank: Barclays 3.05%
Building Society: Kent Reliance 3.50%
Comment, how on earth the Santander account finds its way into the results as a variable rate account is beyond me, its actually a 2-year fixed rate at 4.00% (so equivalent to the 5 years Fixed Rate ISAs). Oh and if Rory McIIroy wins a golf major they will add another 0.10%, which probably won’t make much difference to you, but would to Rory! The Barclays ISA is only for Barclays customers, either with a current account or £500 saved with them. The normal Barclays Cash ISA rates are unsurprisingly bad at a puny 0.10%. The Kent Reliance ISA is a 2 year tracker rate, again look beyond the headline.
Personal Favourites
Again, this is not advice, but my personal favourite Cash ISAs (if you really want one) M&S Money – but watch out for the early withdrawal penalites. ING who are one of the easiest and better Banks (3% no quibble) to save with. Nationwide have some good rates, but better if you have an account with them. They are one of my preferred Building Societies.
Remember that the FSCS protect up to £85,000 per person, per Banking License (which may not be the same as per Bank). Please watch out for this, in the event of a Bank or Building Society collapse you need to know that your cash is fairly well protected, those with large reserves in cash be warned.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Headlines2017-01-06T14:40:03+00:00

Cash ISA Latest Rates

1964: Time of Indifference – Maselli
It has been a little time since I last updated the blog with some of the top rates. Please note that I am often very suspicious of top paying rates. When a bank or building society offer the best rates, it does not mean that they really are the best, in current times it is more likely to mean that they are the most hungry for new funds, which may mean that they want to be competitive, but may also mean that they need the cash more than their competitors. So please treat such lists with a degree of caution. You should also always check the details carefully – making sure that it really is an account that you want. Finally – compensation is very much the word of the day, so make sure that your accounts are within the FSCS compensation limits.
Instant Access Accounts (£5,000 deposit)
Online: Coventry 3.15%
Bank: Virgin Money 2.85%
Building Society: Nottingham 3.25%
Cash ISA – Variable Rate
Online: Santander 4.00%
Bank: Barclays 3.05%
Building Society: Nationwide 4.25%
Cash ISA – Fixed Rate
Online: RBS 4.20%
Bank: Halifax 4.50%
Building Society: Yorkshire 5.00%
Cash ISA rates are generally not a lot better than standard deposit accounts at the moment, so there is very limited tax advantage with a Cash ISA at present.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Latest Rates2017-01-06T14:40:03+00:00

Cash ISA Rates – Strictly Ballroom?

1989: Tango and Cash – Konchalovskiy
A number of clients have been asking about deposit rates and which is the best Cash ISA. I’ve updated the list here, remember that this is not advice, just a list of some of the top rates. Please note that one of the Bank tricks is to entice with a short-term higher rate (a bonus rate) and often this would be withdrawn if you move money away. Also note that sometimes a higher rate may be payable as a bonus, but effectively turns a variable rate account into a fixed rate because of the need to hold the funds for a fixed period of time to receive the bonus. Yes, clarity is one of those things lacking in the marketing of interest rates. It shouldn’t be permitted. Banks tend to lead customers on a merry dance and few people would disagree with the sense that they’ve been tangoed, nothing strictly ballroom about the rules of marketing it seems. Remember to check the details, also remember the compensation limits of £85,000 per account owner per Banking License (not necessarily per Bank).
Instant Access
Online: Coventry 3.15%
Bank: Virgin Money: 2.85%
Building Society: Nottingham 3.25%
One Year Deposit
Online: United National Bank 3.30%
Bank: Santander 4.20%
Building Society: Leeds 4.51%
Two Year Deposit
Online: Nottingham 3.85%
Bank: Halifax 3.70%
Building Society: Progressive 3.75%
Cash ISA Variable Rate
Online: Santander 4.00%
Bank: Barclays: 3.05%
Building Society: 3.10%
Cash ISA Fixed Rate
Online: NatWest 4.20%
Bank: Halifax 4.50%
Building Society: Barnsley 5.00%
I would advise checking Moneyfacts, who provide a free online service to check rates. Have a good look at the detail. Remember though that the effort involved in moving an account may be somewhat overstated when rates are so dreadfully low. As ever, caveat emptor.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Rates – Strictly Ballroom?2017-01-06T14:40:07+00:00

When the Sharks are Circling – Best Cash ISAs

1952: Loan Shark – Seymour Friedman
Vanquis Bank? Financial planning often introduces some new names, but rarely within the retail Banking sector. Vanquis Bank have a head office in London and part of the Provident Financial Group which is currently headed up by Peter Crook (great name for a Banker eh?) anyway the company is credit based and aimed at those that are normally excluded from applying for credit, which is certainly better than going to a loan shark. Despite the fact that the original organisation was founded in 1880 and made pre-tax profits of £62.3m from its 2.4m customers in the first half of 2011, I’m not so sure that I’d be first in the queue to deposit my savings. However they are today’s top of the pops which is listed for your information and amusement. Please remember to check out details carefully and remember the compensation limits.
Instant Access
Online: Santander 3.10%
Bank: Virgin Money 2.85%
Building Society: Nottingham 3.25%
One Year Deposit
Online: Vanquis Bank 3.55%
Bank: Santander 4.20%
Building Society: Yorkshire 5.00%
Two Year Deposit
Online: Vanquis Bank 3.85%
Bank: Cheltenham & Gloucester 3.80%
Building Society: Progressive
Cash ISA Vairable Rate
Online: Aldermore 3.15%
Bank: Santander 4.00%
Building Society: Newcastle 3.05%
Cash ISA Fixed Rate
Online: Royal Bank of Scotland 4.20%
Bank: Clydesdale 4.25%
Building Society: Yorkshire 5.00%
Please don’t simply look at the headline figures, the organisations within this list do not suggest endorsement or approval or advice to use them. This is merely an up to date list.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
When the Sharks are Circling – Best Cash ISAs2017-01-06T14:40:08+00:00
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