Cash ISA now – decide later, at 1.3%
If you’ve got some extra cash you could put away in a Cash ISA while you decide what to do with it, Nationwide have just launched a Single-Access Cash ISA with a respectable rate of 1.3%.
Just in time for you to quickly put a bit more cash away, tax-free, before the Friday April 5 ISA deadline.
Save now, decide later
- It’s not an instant-access account, which is why it offers a rate that’s nearly double Nationwide’s Instant ISA rate.
- But it does allow you access to your cash once a year without jeopardising your rate.
Which makes it a good choice for anyone who’s undecided about what they might want to do with their cash: take it back out for personal use, or invest it in a higher-earning ISA.
Remember, you can only open this account if you haven’t already opened a Cash ISA this year. But you can open it if you’ve opened a Cash ISA previously. (And you can transfer those funds into this account, if this interest rate is better.)
Beat the ISA deadline
A rate of 1.3% is never going to make your fortune – or beat inflation. But it’s better than nothing. And more importantly, it gets your cash inside an ISA wrapper.
- If you put all your spare funds into it before this Friday’s deadline, then any time after Friday you can transfer it over to any other higher-earning ISA account you might already have, or which you decide to open.
- And it won’t count as part of your next tax year’s £20,000 ISA allowance.
In theory, if you haven’t used any of your ISA allowance this year, you could put, say, £20,000 you just happen to have available, into this account before Friday.
And then if you put £20,000 into ISAs after Friday (which will be in the next tax year), and transfer this cash into one of those higher-earning accounts, you could effectively be earning tax-free on £40,000 for the entire 2019-2020 tax year: double your annual allowance.
A useful do-it-now option for anyone who hasn’t had time to plan their longer-term ISA strategy.
Transfer to keep the tax benefit
Remember, if you want move money from one ISA account to another, don’t close the account yourself and take out the balance in cash.
The money must be transferred to retain its tax-free status: the administrators of your new account will arrange this for you.