Interest Rates

[Shetland Don]

The answer will depend on your circumstances.

1. Do you need access to the cash? If you do then best have it in some sort of instant access account. If you don't then you should consider tying it up in a fixed rate bond with a bank/building society. In broad terms you should be able to get somewhere in the 1.5%-2% range for an instant access account and somewhere in the 3%-3.5% range for a fixed rate bond depending on how long you tie it up for.

2. Do you need an ISA or is a non-ISA just as good? That largely depends on both your annual income as well as the amount of other savings you have. All basic rate taxpayers get a £1,000 per annum allowance for interest, which reduces to £500 if you are a higher rate taxpayer. If your interest income is less than the allowance there is no advantage to having an ISA, a normal bank/building society account will do just as good and may pay a slightly higher rate of interest than an ISA account. (If your income is less than the personal allowance then you can get £5,000 of interest allowance but I will assume that doesn't apply here).

For the sake of completeness the other option is to invest in some sort of unit trust, which is basically investing in shares or bonds. More potential upside than a building society account but equally a risk you lose some of your capital. With all the sh1t going on at the moment I wouldn't recommend this.

Hope that helps

Spot on RZ. Also, don’t “go to the Bank” - interest rates are predicted to keep on rising in the short-term but won’t be nearly as much as current inflation rates, so it’s really about mitigating inflationary effects. The stock market has taken a battering in recent weeks but will rebound, I’m sure. It might therefore be seen by some as good value just now for that reason. It’s risky though but if you are able to take a long-term view it generally outperforms cash by a significant margin. Don’t act on this please as it’s just my personal thoughts - see a financial adviser, I’d suggest.