kaupthing edge fixed term deals questions

leyo

Hi!

I'm a student with a bit of money to save and I've been looking at Kaupthing Edge's savings accounts and particularly their fixed term deals. This is money I won't need to touch for a while, and if I understand it correctly because I'm a student I can send them a form and won't get taxed on any of the interest. So a kaupthing 12 month deal at 7.15% would be a better deal than most ISAs ... ?

Does anybody have any experience with these fixed term deals? From what I understand you have to open their savings account first and then you can put money into a fixed term deal. Is that an immediate option? I went through the T&Cs and it looked okay, but I'd like to hear some experiences before I leap! But even if I can't get a fixed term deal, the 6.55% on their savings account beats most ISAs if I'm not paying tax on it.

Thanks for sharing any thoughts on this!

Baldur

I opened a savings a/c with them in April/May, then transferred some of the funds to a fixed term account in June - all went smoothly.

ICICI Bank, with whom I also have savings & fixed term accounts, are offering slightly more interest than Kaupthing on their 1 year fixed rate account at the moment, from memory it's 7.20% AER.

EalingSaver

If you are a non-taxpayer then yes the best 12 month fixed rate accounts are going to give you a better rate than the best cash ISAs.

One question to ask though: are you likely to need access to the money in the future, and how soon are you going to become a taxpayer? You might want to consider an ISA as you have a yearly ISA allowance (up to £3,600) which is use or lose. So if you want to save the money for long term the ISA may be better consideration. But if you are likely to want access to the money at some point, then as long as you are non-taxpayer the better rate fixed term would be best. As a student you are probably right that the best strategy is to get the best rate, and worry about ISAs once you are earning.

On the issue of Kaupthing Edge. As far as I can tell, the minimum balance on the instant is £100; so you may have to have £100 in the instant account as well as whatever you have in the fixed term. However, some of their wording indicates that you can put all of your savings into the fixed term i.e. keep the instant account balance at zero.

And as you say, their instant savings rate is also pretty much the best on the market.

My experience with KE (I have both instant and fixed term with them) has been generally superlative. Website is good (though beware: they are updating there systems this weekend which is the first time I've had a problem with them....) and telephone support is excellent as well (I emailed them today beacuse of a problem and they called me back in 15 minutes; I wasn't even expecting them to call).

Regards to ICICI. IMHO, don't touch 'em. There have been many many posts on this website about difficulties with them (usability, support, wrong interest calculations). In my expeience the marginal rate difference is just not worth the much poorer user experience.

leyo

I've still got two years at university so I definitely won't be a taxpayer until I graduate. At the moment I'm thinking the money might go towards funding a masters degree at some point after I finish my undergrad, so I would probably want to use the money in 2-4 years' time.

I already have just over £3000 in an ns&i ISA from last year which I'm thinking of transferring since their interest rate took a dive since I opened the account, and this academic year I will hopefully have around £4000-5000 to save as well. Some of that money I'll have in the next couple of weeks to put away (£3000 ish) and then the rest later in the year.

I see what you mean about long term vs. short term and 'use it or lose it' for the ISA allowance, I hadn't really considered that.

Thanks very much for the advice, v. helpful! Urgh, still so complicated though.

ldn-100

I am also a student with savings. I have been using Kaupthing Edge for the instant saver. My experience with cash ISAs has put me off using them as they offer poor rates and it is difficult to switch (took me from Nov 07 to May 08 to transfer from NatWest to Bradford and Bingley). Kaupthing telephone support is amazing. The staff are really knowledgeable, friendly and actually call you. ICICI have a ghastly rickety old website and have lacklustre support. I tried to change my address online and they sent me various messages that made no sense! Whatever account you get be sure to request the R85 form to get interest paid without tax.

blinko

i reckon you should build up your cash isa first, carryon doing that, as soon as you hit the world of tax you will have a good 7.2k in there earning interest tax free thr rest stick in KE

LongTermLurker

Agree with Blinko - even though you're a non-taxpayer now, hopefully you won't always be, and you need to consider that your savings now will become taxable in a few years' time (and consider compounding, which will increase your savings significntly in a short space of time). Also, remember that your interest counts towards your tax allowance, so if the personal tax allowance is £6035 and you earn £5035 (putting you under the threshold) the £1001 interest will put you over the threshold.

On the issue of Kaupthing Edge. As far as I can tell, the minimum balance on the instant is £100; so you may have to have £100 in the instant account as well as whatever you have in the fixed term. However, some of their wording indicates that you can put all of your savings into the fixed term i.e. keep the instant account balance at zero.

As long as you have a FTD account you don't need to keep a minimum balance in the normal a/c.

Regards to ICICI. IMHO, don't touch 'em. There have been many many posts on this website about difficulties with them (usability, support, wrong interest calculations). In my expeience the marginal rate difference is just not worth the much poorer user experience.

Couldn't agree more!

leyo

Thanks for the advice everybody, you definitely pointed out things I hadn't thought of. So what I'm thinking of doing now, is of putting £1000 in a KE 1 yr account, then transferring my ns&i ISA to something better and hopefully using up the rest of my ISA allowance for putting in new money this financial year. Then when the KE fixed term account matures around next year I can use it for my next year's ISA allowance.

LongTermLurker

leyo wrote: »

Thanks for the advice everybody, you definitely pointed out things I hadn't thought of. So what I'm thinking of doing now, is of putting £1000 in a KE 1 yr account, then transferring my ns&i ISA to something better and hopefully using up the rest of my ISA allowance for putting in new money this financial year. Then when the KE fixed term account matures around next year I can use it for my next year's ISA allowance.

Sounds like a plan to me :cool: