Tips for Tessa reinvestors

If your account has matured, do not assume you have to reinvest in any Tessa offered by your bank or building society at once.

Even though some banks and building societies are offering special deals for their existing customers, it is still worth shopping around. You have six months to make up your mind whether you want to roll over more than pounds 3,000 into a new Tessa. Savers can put all the capital from their first Tessa, but not the interest, into a new one during this six-month period. Otherwise, the most you can invest in a Tessa in its first year is pounds 3,000.

Furthermore, paying off some of your mortgage or other debts might make more sense. If you are paying a higher rate of interest on any debts than you could earn by saving that money instead, you might be better off without the Tessa.

Tax-free PEPs are a good home for maturing Tessa money but the stock market is at an all-time high and many think it could fall.

Few people put as much money into a pension plan as they should. Even though Tessa money is tax-free, you could double the tax break by putting the equivalent into a pension plan.

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