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About LinkBacksguys, 1 year ago I'd hasve agreed.Originally Posted by TheAnimus
but not now. Credit will become rarer. Harder to get. if youhave aloan and can pay it off, you should, it'll show well on your credit record.
guys, 1 year ago I'd hasve agreed.
but not now. Credit will become rarer. Harder to get. if youhave aloan and can pay it off, you should, it'll show well on your credit record.
But if thats true, then there is an argument to keep the credit you already have available to you. especially if it in the form of a flexible loan, like the Cahoot one I had ages ago, was really just a glorified overdraft.
Everyone is different and their circomstances are also very different. There isn't a hard and fast rule.
As an example, I would rather have 10K in the bank than pay off my car loan right now. I got it a year ago, it is a decent interest rate and like you said, if credit is getting harder to get I'd like to keep what I have
To answer the question.. it's always good to take advantage of each years ISA allowance, as after tax they are often the best rate and even if not in any one year you might find one the next year that is better and you should be able to transfer in previous years allowances - however if you don't take an allowance in a given year you've lost it for ever.
After ISA, the fixed rate savings from the icelandic banks are very good at the moment. If you have enough for the minimum (5000 I think) then the kaupthing edge fixed saving rate gives 6.86%, if you have less than that then Icesave gives 6.76% for 6 month term or 6.7% for a year.
As long as these rates give higher interest (after tax) than loans then you should hang onto the loan (student loans are usually low interest for eg.)
I've read things about the Kaupthing Edge with interest (no pun intended) - it certainly looks interesting and a lot of people seem to be talking about it... but then again, 10 years ago everyone was talking up endowment policies, so I don't know how much trust I can put in them :-S
Cash is cash - you put the money in and have a guaranteed fixed interest on return.
The only danger with cash savings is that the bank goes belly up - but luckily we are now 100% protected up to 35000 so any amount less than that is fine. If you're ultra cautious (ok, I am) then make sure your interest is payed monthly, so that you get the highest possible return at any point if the bank did go belly up.
A quickie since ISA's have been mentioned - the ISA yearly allowance is reset at the start of every tax year, yes?
Does this mean I can now put more money into my ISA this month (whenever the official Tax year begins), even though it was only opened in the middle of last year?
"If you're not on the edge, you're taking up too much room!"
- me, 2005
Kidzer - yes.
You have until the end of today to put up to £3,000 cash into your ISA.
On Monday you can put £3,600 into your new one.
There's a shock.Thanks, but I think I may give that one a miss
In which case, personally, I'd avoid anything share-related at the moment. The market is volatile as hell, with even major players going up and down like yoyos, with some VERY substantial changes in share prices on some big, and fairly unexpected players. Banks, obviously, are having a torrid time of it, as are shareholders in banks. The vast majority of the retail sector is jittery at best, too, and if (as seems likely) the economy worsens, retail will be one of the first to suffer. Some sectors (especially mining) have been doing well, but will it continue? Perhaps, because a lot of the growth is fuelled by demand from China, India, Brazil, etc, which aren't affected, as directly or to the same extent, at least, as the major developed countries. But the future ????
A lot of any problems with shares could probably be ridden out, IF you're prepared to effectively tie money up for what might be quite a while. The problem is unpredictability of timetables. Where you'll risk coming unstuck with anything share-related, beyond the obviously risk of a Northern Rock or Bear Stearns style share collapse is if you get to the point where you need the money and the share price is currently in the toilet. If you can just wait that out, then it's a different picture. So shares involve not just the risk of collapse, or less dramatic significant falls, but also the risk of the timing being wrong unless you can simply wait for your money until timing isn't wrong.
Personally, I think they're a lot of cheap stocks about at the moment and some real gains to be had. But how long it will take to realise them is another matter. Quite possibly years. And there is a risk.
But there's an advantage too, which is the effect of capital gain in share prices when you sell, which means you can not only gain from the share price (hopefully) but can gain the tax benefit from utilising your capital gains allowance as opposed to going for deposit accounts and, usually, paying income tax on interest.
That's largely why I asked if you were risk-averse.
I would also look quite hard at paying down loans. Generally, though it's close at the moment and many mortgages are very close, you'll do better out of saving the interest you'll pay now (and in the future) on loans than you will on earning on savings. But you'll have to do the numbers for your situation, and check out whether any existing finance has early-repayment penalties. It may do, and if it does, it may well make loan clearing unattractive.
If you want savings, I'd say you have to look about. There are some quite attractive-looking offers from names you probably won't recognise. Icelandic banks, in particular, seem to be quite aggressive at the moment.But if you go that way, check out whether any particular bank is fully FSA authorised in the UK, because if it isn't and it does a Northern Rock, you won't get the FSA protection. Some Icelandic banks operate through FSA-authorised subsidiaries and are protected, but others are UK branches, and then in the worst case, you'll be talking about much inferior levels of protection from the Icelandic authorities, with [I]possibly/I] a top-up from add-on FSA protection, but possibly not.
It's actually quite a good time for savers right now. The liquidity crisis (credit crunch) means just about every lending bank is looking to increase the funds it gets from retail customers, and decrease the amount it gets inter-bank, largely because it's having trouble getting it inter-bank at all. There is certainly an element of competitiveness from banks to attract savings funds. BUT .... again, it's volatile. You'll have to check out what's available at the time you are actually looking to invest, because offers come and go almost daily.
A typical bank move is to offer, say, an ISA. They "allocate" a certain amount of money they want to raise and offer an attractive rate on it. They then market the hell out of it, because it gets customers in the door and on the phone. But because they've offered a good rate, they're only prepared to take a certain amount in on that account. Once they've got the deposits they were seeking, and that over is fully subscribed, it vanishes. I've known some ISA offers be on the market for a matters of days, or a few weeks, like that.
So even if you do the rounds of the comparison sites and get the best deals today, it doesn't mean that someone else won't have a better one, or that that current good one will still be there, either tomorrow or next week.
One more point. I don't know how much you're looking to save, but that FSA protection only gives the
full protection to the first £35,000, and that's per institution. But how do you define "institution". Halifax and Bank of Scotland, for instance, are combined as HBOS. Most banks also have online banking operations that,superficially at least, look to be separate. But aren't.
If you're saving (not just now, but in total) more than £35,000, spread it around. And check the registration details on the FSA register to ensure that the places you're spreading it too aren't actually all part of the same organisation. And that's also why I asked if you were risk-averse.
santa claus (04-04-2008)
It's worth remembering, too, that those are the limits you can pay in during the fiscal year, NOT the balance you can have.
If you pay in £2500 on day one, take out £2000 for a few days the next week, you've used £2500 of you pay-in allowance and can't put it back in. You've only got £500 of the £3000 allowance left to pay in.
It's also worth remembering that you have to bear that in mind when transferring between ISAs. ISAs are often marketed with having a high interest rate for a year. Banks typically do NOT go out of their way to point out that the rate may well be a lot less attractive after that year. I have one ISA, for instance, paying 6.5% last year, but it drops to (IIRC) 4.25% after 12 months. Have the bank concerned told me that? Have they hell.
Next, if I draw out £3000 from ISA one and pay it into ISA 2 next tax year, it uses £3000 of my £3600 allowance. If I transfer it from ISA 1 to ISA 2 without ever touching it myself, it doesn't impact on next years allowance and I can add the full £3600.
Don't get caught out that way. A lot of people do.
I would have to agree with the statements said here about playing 'the market' there is such uncertainty right now you only have to open the paper to see so much bad news.
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Both Icelandic banks I mentioned are protected by the FSA by the way - KE is identical to UK banks, Icesave use both FSA and an Icelandic equivalent - you get the first 20k or so from the icelandic system then the rest up to 35k from the FSA. The advantage of that is that banks in icelandic system is pay in advance rather than the FSA where they pay afterwards.
Indeed .... but risk and uncertainty also equals the potential for high profits/gains, if you have the stomach for it and are prepared to wait (for years if necessary) to ride out the rough times that are (very probably) almost with us.
On the other hand, there is also the potential for losing your shirt. And I'm partial to my shirts.
Thanks for the essay Saracen
I doubt I'll have anything even remotely close to the limits you all describe (35k), unless i get really lucky
So, an ISA. As I originally said, I have an ISA with Barclays already (opened 07-08), can I open another one this tax year (08-09) though? I don't really understand all of the stuff they come out with 95% of the time
yes you can.
Your anual limit is now £3,600 from 6th April 2008 (7th this yeah as 6th is a Sunday) until 5th April 2009.
I see Barclays have decided to change their Personal Savings Accounts AGAIN. Grr. I'll check when my statement comes through if they are shafting me on interest. When Barclays bought out Woolwich, my savings got moved to 'Flexible Savings'. Then a month after they had a revamp and my flexible savings was getting like 2% interest. Then I moved it to Day to Day which gave me 4.something%(gross), now they have changed them again and I get 3.44% while their new Active Savings is at 3.93%
Stupid bank. They don't even send the customer out info of any changes.
Anyways, rant over. Yes I know its a measly few %, I am just more miffed they keep rehashing their savings accounts. Thats 3 times in a year I think near enough.
Look at the MSE to see the ones with the best deal, especially if you have to put in say £3k to start with, do that today by transferring your old one over and then top it up on monday
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