Have I made a mistake - ISA vs fixed rate?

OnlyMe_08

Not sure if I’ve made a mistake, but I finally got round to subscribing to an ISA to use the 2008-09 allowance.

I have a current account and the guaranteed saver (paying 6.25% gross) with the Halifax. The guaranteed saver is at a fixed rate till the beginning of July 09.
Would it have been better if I’d invested into this account, rather than the ISA direct reward (which is at 3% tax free).

From April 6th, I think I could pump in a further £3600 – so does that mean interest will be earned on the £7200?

Final question would be could I go with another provider with next year’s allowance?


Thanks

opinions4u

OnlyMe_08 wrote: »

Would it have been better if I’d invested into this account, rather than the ISA direct reward (which is at 3% tax free).

If you're saving short term, the ISA is a bad decision. If you're likely to leave it there over a couple of years, the ISA will probably work out to be a good decision.

From April 6th, I think I could pump in a further £3600 – so does that mean interest will be earned on the £7200?

Yes. But why not bang the £3,600 in to the Guaranteed Saver Reward until July? Then make your ISA decision at the end of the Reward period?

Final question would be could I go with another provider with next year’s allowance?

Yes. But 3% fixed with access is a decent deal. It may be even better come July.

wombat42_2

It is widely speculated that interest rates could be 5% in 12 months time to cointeract inflationary pressures. It might be an idea to put half in a fixed interest and half in an ISA.

opinions4u

wombat42 wrote: »

It is widely speculated that interest rates could be 5% in 12 months time to cointeract inflationary pressures. It might be an idea to put half in a fixed interest and half in an ISA.

The Halifax product is one that is fixed now, but has no restrictions that would penalise customers for transferring to a higher rate competitor if rates improved elsewhere.

The benefits seem to be skewed the customer's way.

OnlyMe_08

thanks for the replies

Should I close the ISA and shift the funds into the GR acct?


On a side note, it appears I could only post / reply when I log on at work.

When at home, I keep getting the error that the message needs to be at least 10 characters long - any ideas?

gozomark

wombat42 wrote: »

It is widely speculated that interest rates could be 5% in 12 months time . .

I thought consensus was more like 1%, or 2% max, which I agree with

edit: do you mean 5% for base rate or for fixed term savings ? By 1-2%, I mean base rate