Hi there,

First time post from a newbie here!

I'm 27, in full time employment with a desperate need to go travelling for a year or so.

I've always struggled to save money but last year I opened up a mini-ISA with ING Direct. I've now got my hands on a little bit more money and also intend up selling A LOT of things to get some more money to save. Don't get me wrong, I'll only have between £1,000 - £3,000 to start off saving - so not a huge amount, but I would like to find the best way of getting the highest amount of interest possible.

I am confident that I can leave the money untouched for one year and I could also deposit a minimum lump sum of £1,000

I am wondering whether I should just continue to add this money into my mini-ISA, or try one of the other options which I have read about on this site:

Savings account with ICICI Bank (HiSAVE Fixed Rate Account @ 7.20% AER).

Halifax International Regular Saver Account. 10% AER/Gross PA for one year, then transferred into the Sterling Variable Rate Halifax International Web Saver account.

If allowed, change my mini-ISA account to one offering a higher rate of interest.

As I don't really have a great knowledge when it comes to saving the above is only really what I have found to be on offer. So any other options anyone can suggest will be gratefully received.

I look forward to reading your advice.

Many thanks.

Can anyone help!?

Hi,

As you are a tax payer, any of the high rate savings accounts - like the 7.2% ICICI account - will be subject to tax on the interest so the rate you will get will be more like 5.76%

You are probably best continuing with the ISA and use your full allowance before looking at other accounts.

If you're talking about one year, then no-one can help. The differences in interest yielded will be trivial. Your efforts should be concentrated on controlling your spending and saving money - over the short term of 12-18 months that will yield a much larger pot than fretting over AERs. Just make a choice and start scrimping and saving. For example, if you are in the habit of buying coffees, drinking an espresso instead of a cappuccino will save you £500 per year. Or slumming with the free workplace/home instant will save you even more. Compare that to the £15* or £50** difference in interest savings.

* £100 per month yields £39.26 at 7% or £56.56 at 10% (minus tax)
**£1000 deposit + £100 per month yields £111.55 at 7% or £161.27 at 10% (minus tax)

Many thanks mooreaz and shiverkitten for your replies.

So you would even advise against me going with the Halifax offshore savings account (Halifax International Regular Saver Account) http://www.halifax-international.com...c&source=NETP1 where you can receive 10% AER/Gross PA for one year, then the funds are transferred into the Sterling Variable Rate Halifax International Web Saver account http://www.halifax-international.com...g-websaver.asp

Would you still not get around 8% interest even after the tax deductions?

Thanks again.

Hi,

Yes I would advise against it. The Halifax account is really good, provided you can guarantee your monthly contributions every month for the entire year.

I got the impression from your original post that you would be adding to your savings as a when you are able. This does not suit a regular fixed saver account.

Also, as SK says, the difference in interest between 6.2% and 8% for these sums is negligable when you consider the risk that, if you do not abide by the strict rules of the Halifax account, you may end up earning 5.8% in the Sterling Web Saver account. This could even be 0% if you have less than £1000.

Hope this helps...

Thanks again for your advice mooreaz.

I would actually be fine with making monthly deposits of £100 in addition to the lump sum that I have ready to put.......somewhere! So apologies if my original post was misleading against this.

So I am confident that if this route was appropriate I wouldn't touch any of the funds within the 12 months.

With interest that is applied annually, is it better to find one that is applied on a monthly basis instead?
Am I right in thinking that I wouldn't get 10% on every payment, and I would in fact get around £59.93 interest if I was to pay £100 per month. As payment one would be in the account for 12 months earning the full 10%, the 2nd payment (month 2) is only there for 11 months so gets 11/12ths of the annual interest rate and so on.

Thinking about it all is even a chore in itself!!

Cheers.

That's about right.

As you can see, £60 interest is not as impressive as the difference you can make by saving harder as SK said.

Hope all this helps anyway.