Big yes to this! Being a tad ignorant but is there a minimum amount of time before money can be withdrawn from this type of ISA?
Count me in
Without sounding rude why would I want an ISA account over a savings account? They have terrible rates and no advantages?
Unless Monzos are going to have 1.5% easy access, or 2% fixed 1yr, or 2.3% fixed 2yrs then it’s not going to be competitive with the likes of OakNorth or Marcus.
The biggest advantage of ISAs is the interest earned is tax free until the Government change the rules
for simple math save £20K every year for the next 20 years = £400,000 savings
say 2% interest rates in 20 years time = £8000 / year interest after 20 years savings
current rules - ISA interest tax free - £0 tax bill , savings account if lower rate tax payer £1400 tax bill every year ( £8K-£1K allowance @ 20% tax rate )
Then add in over a 20 year career your earnings would hopefully go up - who knows maybe into the super rate tax band ?? and those missed ISA tax years start to really make a difference to your tax bill
Change ISA to stocks and shares ISA - at the moment my SSISA is giving me more than 1.5%/ year tax free, why would I want a cash savings account paying 1.5% ?
- if you dont use your yearly tax free allowance you lose that allowance forever whatever the interest rates eventually hit
But as Savings accounts have been tax-free for the vast majority of people for the last few years as they aren’t earning over £1000 in interest a year, or even £500 interest for those in the higher income range.
Id imagine if you looked a Venn diagram of Monzo customers on salary of £150,000+ and/or have millions in savings it would look more like a drawing of a penny farthing.
If you’re playing the long game it’s far better putting your money in property or shares than having a massive amount in savings.
I agree, but things change - tax allowances change, ISA interest changes, ISA allowances change - depending on when you put your money into property its a good “investment” , I agree about shares , depending on when you put your money in shares , but I would still make the point the whole of your interest in ISAs are tax free, savings have a limit on their tax “freeness”, and that you cannot go back and claim your ISA allowance from previous years
I think its quite well known that currently, due to interest rates that slamming money into an interest bearing current account it more “bang for your buck” than a typical cash ISA.
But for Monzo, interest bearing current accounts may just not be scalable and likely highly loss bearing currently - imagine having to pay x% on the 1.5 million accounts they have.
Whereas, introducing their first interest bearing product where the cash itself is “secured” and not likely to move in and out allows them to take the first step.
I think that depends on where you are in your financial life , I could tie up my ISA tax free for two years and get more than 1.5% bang for my buck tax free or I could put my money in an instant access account for 1.5% and maybe go over my £1000 allowance and have to pay tax on it
edit although I do understand Im comparing apples and oranges instant access and fixed term
I understand Monzos had to start somewhere but as a saver there’s no incentive to go with a rate unless it’s competitive with other saving options.
Out of the 1.5 million accounts it’s going to be an incredibly slim percentage that are outside the tax-free threshold that you get with a savings account.
I can just see this being another repeat like the paypoint £1 to deposit and £1k limit every six months, when you can put £20k in everyday for free elsewhere.
Or the Monzo Plus where you’re paying £132 for what feels like a different coloured card.
Or the integrated energy switching…
Maybe I’m just grumpy today.
maybe we should wait and see what the interest rate offered is - then we can all be grumpy
Ironic that a measure brought in to encourage low income people to save ends up being of most benefit to the relatively wealthy.
Its not just comparing instant access and fixed term - its about taking your personal position out of it.
Obviously we’d love for everything that Monzo brings out to be market leading, but its not feasible and they need to create some products and build upon it. We as a community are very knowledgable about the fintech and financial world - so just saying “it needs to be better than Marcus” doesn’t help as the normal Monzo user would probably prefer to use a Monzo 1% ISA than a Marcus one.
Exactly, but they need to cater for everyone - if you can get a better “bang for your buck” Monzo aren’t telling you not to do that.
I agree, but as I said to @iansilversides you are likely widely aware of what is out there, being able to have an ISA in your banking app will likely appeal to some (even if it doesn’t beat a Marcus rate for example).
But that’s a personal customer advantage - not a Monzo advantage - they’d still be paying the interest.
Not at all, I just think its important to not conflate what Monzo need to achieve and what a customer wants to achieve
I am not knowledgeable about fintech and the financial world at all. I’m learning A LOT and Monzo has been the spark behind that. I’ll sign up for this ISA regardless of rate for two reasons
- It’s a savings mechanism and one I’ve not had before (I have very little savings).
- It supports Monzo. I’d rather they got my business than this ‘Marcus’ guy! Seriously though, it’s better than nothing which is what I have now.
Ohh and if I could afford £20k savings a year I’d be… rich enough to not be worrying about savings?? The rich get richer…
I didn’t mean for it to come across in a negative way (sorry if it did).
But I was trying to say that this forum pushes the “market leading” products - whereas some customers (like yourself) would rather it all be in one place as you begin to build up your financial war chest.
There is a slight divide in what some customers want, and that’s okay its just important to not forget about the other side.
WE CAN DREAM
Unless you’re lucky to be able to solely live off someone else’s money then saving £20k a year is tricky… …especially if you’re on a £20k net income.
I’m just happy if I can put £500 in shares and £500 in savings each month, and with that £6k going to receive more than 100 quid in interest a year. Nowhere near hitting the threshold unfortunately.
Shares usually give me way more return from £6k invested.
I mean if I was able to chuck £20k into savings each year at 2.3% AER I’d still be under the tax-free £500 interest threshold.
This is the whole point of the forum , people in different stages of life can offer - rightly or wrongly their view on how they have travelled through their financial life - highlighting their mistakes and successes , people can then choose to take on board that opinion or not , I wasn’t born with a silver spoon in my mouth, I’ve been relatively successful , I didn’t slap £3000 in an ISA in 1999, I had other priorities , I wish I had put some aside every year, because I can now see the advantages of tax free benefits, but financially I couldn’t afford it .
Im not suggesting that everybody needs to put in £20K in the tax year - if you’re on £20K obviously that’s not possible , maybe Im suggesting from little acorns oak trees grow
If you can afford to put money in a 1.5% savings account , you can also chose to put that into an ISA account , the choice of where is ultimately yours .
An increasing number of posters are saying , with Monzo and Starling and other Fintechs Im actually getting a handle on my finances and feeling more in control - thats great, hopefully this forum helps.
After 3 years you will have £18k in your non-ISA cash savings. If interest rates have gone up significantly in 3 years (unlikely, but who knows) or if the personal savings allowance goes away (there’s no guarantee its there for good) it would then make more sense to have that money earning interest in an ISA even if still in cash form.
Trouble is if you move £18K into an ISA in one go you would be using up almost all of your ISA subscription allowance that year. You then have a problem of what to do with your regular investment/saving that year which might have gone up if your income has gone up.
What I do is move my non-ISA cash savings into a flexible cash ISA on 5th April every year and then move it out again on 6th April (and back to a higher interest account). Because I use a flexible ISA the money I take out on 6th April can be put back in the same tax year without contributing to my subscription for that year. So I currently benefit for higher interest rates for cash savings outside of an ISA but there won’t be a point in the future when I need to use up a large chunk of my ISA subscription to move my cash savings into an ISA (it will count as having be subscribed in previous years).
I’d love to think it keeps accumulating each year and is never touched, but unfortunately never seems to more than ~£10k on avg due to holiday or car or house improvements / large tech purchases or which is probably the most expensive. If it ever actually got high from a multibagger I’d prob do something boring like pay a chunk of mortgage to reduce mthly or look to buying a nicer home.
ISAs might be the right option for some with tidy savings, but I would still suggest it’s the minority of the 1.5m accounts with significant savings able to benefit from it over a savings account.
I could well be wrong but I’m just guessing with the demographic it feels aimed towards tech savvy 16-40yr myself included. They aren’t able to make huge savings from salary or from selling property they bought 20 years ago, more from inheritance, silver spoon, own business or good fortune coming into large chunks of cash. And in those cases prob be putting in the best rate not because they can view their balance through the Monzo app by having it under one roof.
Gut feeling Monzo will offer a 1.1% easy access flexible ISA
Not sure what the previous record is for most edits on a post, but I’m pretty sure you’ve beaten it