Last Friday, I received a letter from the Nationwide Building Society advising me that as from October, the interest rate of my cash ISA was dropping from 1.5% to 1.25% – well, it was good of them to let me know as it meant I could do something about it.

I’ve needed to sort out my cash ISA for a long time – I’ve been using it as an ‘extension’ to my emergency funds account – paying off holidays, unexpected expenses etc, so it’s not a true long term savings account and consequently, there’s not a lot in there, only around £5k. 

Around £3k of that has been ear-marked to pay off my car loan next year.

My cash savings need to be somewhere where I can’t touch it – my previous cash ISAs have always been easy-access accounts so it was time I found a fixed rate account to tie up my money for a few years (Task 1), with the money to pay off my car loan being kept separately (Task 2).

So on Saturday, I closed the Nationwide ISA online, transferred £2k into my current account and moved the rest into my actual emergency funds account (a Nationwide limited access account which pays 1% net interest). The cash to pay off my loan is now separate from my savings – Task 2 completed!

I then did a quick search of fixed rate ISAs, found a decent one with Skipton Building Society paying 2.75% for 5 years which could be opened and managed online (quite a few accounts with other banks/building societies could only be opened at branch only) and transferred the £2k from my current account to open the account. Task 1 completed!

It’s possible that I’ve not made the best choice getting this fixed rate and that it may not even be the best deal out there. 2.75% is a bit better than other rates available now but might be absolutely rubbish when (not if) interest rates go up, as they are supposedly about to any time now so I could end up losing over the next few years.

Still, the main thing was that I needed to start locking away some money so I can’t dip into it and that’s what I’ve done now.

Anyway, all this pushes me to start managing my emergency funds account better – it’s taken a battering these past couple of years (just sorted out my Christmas plans so another chunk has come out of it!) and I need to start building it up again.

And finally…