# Saving...dedicated savings account or normal current account?



## Pandy (Jan 19, 2008)

Hi guys.

My fiance and I are saving for a house deposit now and im abit unsure of what difference accounts can offer.

What do dedicated savings accounts offer over a joint current account? As we will need one of those anyway.

Do you get taxed on a savings account? As im pretty sure you dont on a current account regardless of the money in there?

I dont really trust savings accounts for some reason, yeah ok there might be a tiny gain from using them but whats the point if its only going to be £100 out of a few grand?

Thanks for the help in advance.
Andy


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## robj20 (Jan 20, 2009)

Fill an ISA thats the best (highest interest and tax free), then something like a fixed term saving account would be second best. I have a regular saver with Halifax that takes £250 a month then at the end of the year puts that in my isa and guarenteed reserve account and starts again. Gives me the most interest for my money.


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## Pandy (Jan 19, 2008)

The problem im finding with savings accounts is that you can only put a certain amount in a month to get a good % back (4% if you deposit £250-300 - but if you put more in it goes to 0.1% with Santander for example) whereas we want to be saving at least £700 a month plus whatever else we can spare (live at home - no major bills)

Does an ISA limit the amount you can put in a month?

Mind boggling :wall:


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## robj20 (Jan 20, 2009)

An ISA is a one of payment at the begining of the year for the fixed ones anyway.
Just put as much as you can in the highest ones, then the next highest, lot of messing about sometimes but every little helps.


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## mattsbmw (Jul 20, 2008)

Personally i would go for a regular savings account and i would potenatially go for a an account that requires notice to be given, take away any temptation of dipping into it.


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## robj20 (Jan 20, 2009)

Regular savings will never be brilliant for interest as you only get the full rate on the first payment, so if its £400 a month you get your 3% or whatever on that then it drops for the rest of the payments. ISA is the best way to go first, then other fixed term ones where you put say £5000 for 12 months with no withdrawls allowed.


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## Pandy (Jan 19, 2008)

There will be no need to dip into the savings...this is purely for a house - we said we would do it last year but didnt and are more eager than ever to move out.

I can get an ISA with Santander with a better rate as i have been a current account user for years now, might look into that as if we both get one each thats 10k in ISA's then whatever else can either stay in our current accounts or go into a savings one.


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## Tricky Red (Mar 3, 2007)

Pandy 

I would stick it in an ISA. You can currently stash away £5100 per year tax free each and just close the ISA when you need the money out. The rates aren't brilliant at the moment though, but at least it is tax free. 

Be aware that if you need to withdraw funds short term, you cannot replace them without it already counting to your allowance. 

e.g. If you invested £5100 immediately and then needed £1000 for a short term emergency, then you cannot put it back. Once you have made deposits to the maximum you can't deposit any more. In your case, for regular savings, you should be ok.


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## Pandy (Jan 19, 2008)

Thanks :thumb: that helped me with that side of it.

What i dont get with an ISA is what happens after the 12months are up? Is it if you hit the £5100 target, the ISA will stay tax free for as long as its open - but its when you dont hit the £5100 target that you get taxed after the 12 months?

Thanks for the help all, has given me a good idea of how it works


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## Tricky Red (Mar 3, 2007)

Pandy said:


> Thanks :thumb: that helped me with that side of it.
> 
> What i dont get with an ISA is what happens after the 12months are up? Is it if you hit the £5100 target, the ISA will stay tax free for as long as its open - but its when you dont hit the £5100 target that you get taxed after the 12 months?
> 
> Thanks for the help all, has given me a good idea of how it works


You don't need to put in the full amount matey. Any savings within an ISA are tax free. The encouragement is to try and put the full amount in, as once the tax year is over you can't go back.

So, say for the next couple of years the limit is £5100 each year and you put in £2500 in the first year. You *cannot* rollover the other £2600 into the next year and add it on to the £5100. You are limited to a maximum of £5100 per year.


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## leigh258 (May 20, 2010)

so with an ISA, if at the end of the tax year you have 5100 in there, can you then leave it in and then add another 5100 to it the next year??? or does the 5100 have to be taken out before more can be added??


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## Pandy (Jan 19, 2008)

Tricky Red said:


> You don't need to put in the full amount matey. Any savings within an ISA are tax free. The encouragement is to try and put the full amount in, as once the tax year is over you can't go back.
> 
> So, say for the next couple of years the limit is £5100 each year and you put in £2500 in the first year. You *cannot* rollover the other £2600 into the next year and add it on to the £5100. You are limited to a maximum of £5100 per year.


Ahhhh i see how it works now :speechles

Thanks for clearing that up mate :thumb:


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## Tricky Red (Mar 3, 2007)

leigh258 said:


> so with an ISA, if at the end of the tax year you have 5100 in there, can you then leave it in and then add another 5100 to it the next year??? or does the 5100 have to be taken out before more can be added??


Yes, that is the idea. So, say for example you had invested £5100 for 6 years, your nest egg would be worth £30600. You earn interest on the compounded amount too, but for this illustration, and assuming an interest rate of 2.5%, you would be earning interest of approximately £64 per month for this year. Nice for doing nothing.

Keep your hands off the cash and it will earn for you.


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## ant_s (Jan 29, 2009)

Yeah, I have an ISA aswel for the same thing Andy, opened it last year and the max amount was £3600 - got to that amount, but then decided to buy my car lol. But this year it's £5100, so will get that put in there and then start again.

It's pretty good that when it's there it's in your mind not to touch it but if you *need* it you can get it, but like said above, you can't take it out and then replace it again if you've already met your limit.


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