Save/Invest £100 pm

A cash mini ISA is like a savings account without paying tax - it is merely a wrapper for a savings account. Therefore you should go for an ISA with the highest rate of interest - search on the internet to get rate comparisons.

BTW, if you have debts it is probably better to pay those off rather than save.

cd

It depends on your circumstances and tax status, but HBOS have this special deal at the moment (likely to be short-lived) where they pay 6% gross (non-ISA, so worth 4.8% to normal taxpayers, which is more than you're likely to find in any cash ISA), but is only available to monthly savers who put in between £25 and £250 a month. Just right for you, it would seem.

I looked into this account, it seems to be an attempt to get you to open other Halifax accounts. In order to open this 6% regular saver account, you have to nominate or open another Halifax account to transfer the money to at the end. Only 4 account types are allowed, 3 of which require a minimum 500 deposit to open and obviously pay much lower interest. By the looks of the application form, you need to open this other account at the same time as the regular saver account.

The fourth is the web saver account, which only requires 1 to open, but I couldn't find any information on how you withdraw money from this account, other than a cashcard (which reduces the interest rate if you choose to have one), or transfer to *another* Halifax account!

Also the 6% rate is fixed, with interest rates likely to rise over the coming year the differential with other high interest accounts will reduce by the end of the term.

Something I don't understand is that they say the rate is 6% paid annually on the anniversary of the first deposit, but the AER is 6.05%. How can the AER be higher when interest is paid annually? Ronald?

Without a hint of irony, criticaldensity astounded uk.finance on 04 Mar 2004 by announcing:

Currently IF.

Or pay them off with an IF loan and either offset the interest against that, or earn the same interest rate (tax-free) on the ISA. I'm getting 6.9% on my ISA at the moment.

I haven't looked at the application form, but it's conceivable you can apply for it now but not actually activate it until the sweep takes place at the end of year. In that case, it looks no good unless you save enough to have scraped together £500 by year end, which is not possible with the minimum £25pm.

It can't, and therefore I suspect they don't actually *pay* the interest at year end, they simply *sweep* the interest which has already been earned (and hs been compounding monthly in the normal way at 0.4% net).

Now, normally, if you were investing a lump sum, you'd expect

0.4% pm net to compound to 4.907% pa net, equivalent to 6.134% gross.

But this account is a time-limited one-off scheme with fixed monthly contributions. It's equivalent to the first month's investment earning 0.4% net for 12 months, the second for 11 months, and so on. It's clear that the last month's investment's AER must be 6% exactly, and so the overall AER must be somewhere between

6.000% and 6.134%. I make it 6.06659%, maybe they're rounding to the nearest half decimal.

"Andy Pandy" wrote in message news:yHH1c.17340$Y% snipped-for-privacy@wards.force.net...

You can set up transfers from a Websaver (with or without a cash card) to any account with another organisation.

It's one of the options on the left hand side of the page when you are logged into that account.

Hi

Depends really on your Income Tax. Do you want tax free, or if you're only a basic rate taxpayer, both ING and EGG have some good fixed rate deals on ATM, with no silly withdrawl rules. ING looks good particularly as the interest is credited monthly.

In message , DG writes

What type of ISA are you referring to?

The other replies seem to be concentrating on bank accounts. If you reckon you can keep the 100 quid going for five years or more and dont envisage wanting any access to the dosh in the meantime then have you considered investing in Unit Trusts/Investment Trusts/ or other collective investments?

If you can handle the potential risk in return for the potential gains then let the group know. If so it may be worth wrapping an ISA around whichever fund or funds who decide to invest in.

It asks you to provide a roll number of an existing account of one of the 4 types allowed, OR an amount to invest in a new account of one of the types allowed except the web saver.

It does actually say "Interest will be paid on the anniversary of the first deposit when the amount saved, with interest, will be transferred to you nominated Halifax account".

Thanks. The rate's not bad on the web saver and you don't need to stump up 500, so look like the sensible thing to do is to open one of these before walking into the Halifax to open a regular saver...

I think in this context "paid" means "paid out", not "paid in".

I now suspect interest is in fact applied and compounded quarterly. I withdraw my earlier answer in which I sought to treat the thing as 12 separate accounts lasting, respectively, for 1 to 12 months, and working out an independent AER for each of them, and then taking the mean.

The correct method is, to calculate the AER as that rate which would result in the same balance as is actually attained, if there were no compounding at all during the year. In this context, therefore, the interest which would hypothetically be applied at the end of the year would be for 78 months' worth of the monthly sum deposited, because the

1st deposit earns 12 months' interest, the next 11, etc, and the last 1.

Now, if the contract rate is 6.00% gross pa, and the monthly deposit is £100, then:

(a) if interest is applied monthly at the net rate of 0.4% per month, the balance at the end of the 1st month would be £100.40, at the end of the 2nd it would be £201.20, etc, and at the end of the year we'd have £1231.66. The AER is thus £31.66/£100 * 12/78/0.8, which is 6.088%, which is not close enough to 6.05% to be plausible unless an unusual rounding algorithm is involved.

(b) if interest is accrued monthly at 0.4% and applied quarterly, then the balance at the end of the 3rd month would be £300 plus 1 months' interest on £100 plus 1 months' interest on £200 plus 1 month's interest on £300. That's £302.40, whereas with monthly compounding it it would have been almost £302.41. At the end of the year we should be at about £1231.54. Applying the same AER formula, we get 6.065%. Actually, the year-end balance to greater precision is £1231.5475, corresponding to an AER of 6.0668%. But both of these are consistent with 6.05% if rounding to the nearest twentieth of a %.

It all depends on what they do with fractions of a penny of interest. If they're just dropped ("embezzled"), it would tend to reduce the AER.

Without a hint of irony, Alex astounded uk.finance on

04 Mar 2004 by announcing:

They're increasing it to 4.6% AER, BTW