Alliance & Leicester Direct ISA Issue 4

Craggle83

I have an Alliance & Leicester Direct ISA Issue 4. I have £3000 and plan to top up the remaining £600 at the end of this month. The rate was originally 6% but has now been dropped to 5.75% with a bonus 1% payable to 31 May 2009. This is a stupid question, but should i transfer the full amount to another ISA with higher interest soon or wait until end of May to get the bonus 1% and then transfer? I guess I will lose all of the interest I have accrued over the yr?

YorkshireBoy

Craggle83 wrote: »

...should i transfer the full amount to another ISA with higher interest soon...

Only if you're sure the new provider won't then cut their rate. Perhaps better to wait and see how the recent 0.5% BOE rate cut pans out first?

...or wait until end of May to get the bonus 1% and then transfer?

You don't have to wait for the bonus; you're already earning it now...it's just accruing in the background.

I guess I will lose all of the interest I have accrued over the yr?

You guess incorrectly. You're earning/accruing interest each day (at the rate of 'balance x 5.75% / 365'). When you transfer, this interest will be paid up and transferred along with your capital to the new provider.

Craggle83

I have checked my interest rate on the Alliance & Leicester Direct ISA Issue 4 and it has been dropped again to 5.25% (also with a 1% bonus payable until May 2009).

I would appreciate any advice on whether I should transfer (to something like the new NAtwest ISA mentioned discussed in this forum) or stick with my current one until the end of May to get the bonus.

If I did transfer now, would I incur any penalties and lose any interest? I can't find this mentioned anywhere.

masonic

The bonus is rolled into the underlying rate and paid pro rata. You won't sacrifice any bonus interest you've accrued by transferring now. A&L don't charge any other penalties either.

StrawberryJam_2

I was a little surprised to see that my A&L ISA issue 4 had dropped to 5.25% from 6.0% today

I reckon all savings rates will be lower as of today...

BiggaThanBen

StrawberryJam wrote: »

I was a little surprised to see that my A&L ISA issue 4 had dropped to 5.25% from 6.0% today

I reckon all savings rates will be lower as of today...

Actually it dropped from 5.75% on the 3rd of November (following BR cut in Oct 08)

6.0% - 5.75% change was in October (following BR cut in Apr 08)

I expect another 1.5% off this rate soon ...

Inforapennyinforapound

BiggaThanBen wrote: »

Actually it dropped from 5.75% on the 3rd of November (following BR cut in Oct 08)

6.0% - 5.75% change was in October (following BR cut in Apr 08)

I expect another 1.5% off this rate soon ...

I too have Direct Isa issue 4 at Alliance and Leicester and was considering transfer.However i see that you have to open another type of account also with Natwest or RBS(this is so if you accidently over-subscribe they will put this money into the other savings/current account)......

Also although these other rates are better AT THE MOMENT how do we know that the rates wont drop again next week? (the variable ones anyway)..Im leaving mine with A&L at present......i may be wrong but nobody can give the definitive answer.

YorkshireBoy

Inforapennyinforapound wrote: »

Also although these other rates are better AT THE MOMENT how do we know that the rates wont drop again next week? (the variable ones anyway)..Im leaving mine with A&L at present......i may be wrong but nobody can give the definitive answer.

The NatWest product offers a bonus (which won't be cut for existing account holders) for the first year. They may cut the underlying rate, but then if they cut it too much they risk not being able to pull in new funds with ISA start-ups.

I think you're making the wrong decision, and for the wrong reasons (which you're perfectly entitled to do ) by leaving it with A&L...who no doubt, as we speak, will be planning a major cut on the Direct ISA 4 rate, and simultaneously launching their Direct Saver 5 product (which will replace the account that replaced the Direct ISA 4).

BiggaThanBen

Inforapennyinforapound wrote: »

Also although these other rates are better AT THE MOMENT how do we know that the rates wont drop again next week? (the variable ones anyway)..Im leaving mine with A&L at present......i may be wrong but nobody can give the definitive answer.

I will try to move it Birmingham Midshires, if that does not work, won't bother ... should have done it a month ago .. fixed all other savings, but forgot about ISA ((

Inforapennyinforapound

BiggaThanBen wrote: »

I will try to move it Birmingham Midshires, if that does not work, won't bother ... should have done it a month ago .. fixed all other savings, but forgot about ISA ((

Thanks for the comments.....i am inwardly digesting them with my lunch.

I looked at Bham midshires but see that withdrawals are by post and subject to 90 days losss of interest.....not overly convenient but we are all in different situations.If i could transfer my isa and guarantee myself not to touch it then fine...but i might just want to buy something.Each to their own i suppose....but i do value your opinions :beer:

Tudorln

Hi All, Just had a letter from A&L informing me that the Direct Issue 4 ISA that I took out at the A&L Branch Swinton, Lancs is invalid as they failed to process it in time.
The Account must be closed and they enclose £10 to make up the difference between the gross intrest and the net for the past 6 months.
So all the time I thought I had an ISA with A&L and the £3600 that showed in my account online was in fact just a deposit attracting tax at 20%.
They have sent me forms to complete to open a new direct Savings ISA Issue 4 and they will then take the balance from my invalidated account and credit my new account and return any closing intrest.
What would you do if in my position?