Best Currrent ISA for compound interest?

Crown

Hi all,

I have been sorting out my finances with the help of this site and hope you can offer some advice.

I have been made redudant and have £3000 I wish to save and thought a Cash ISA would be the best place for it. I have been looking at Moneysupermarket.com and there are various rates listed there and also different times that interest is paid.

Can someone advise what would be the best way to take advantage of compounding interest. I am afraid Im still a newbie and cant work out what the best rate is. Surely it would be best to have interest paid monthly so that will compound ??  ???

also would I be better waiting until the new year to see if there are any new offers on the horizon or should I take the plunge now? I want to get my money in before April so I can start a new ISA 2005

Thanks in Advance

deemy2004

Halifax 5 year 5.7% fixed - be quick though ! as the rates are constantly being revised lower and this is much higher than the rest.

Crown

Looks good, I'll try and see if I can get this deal tomorrow.

Do you think there is likely to be a better deal shortly? I must say that interest rate looks good but is the interest paid monthly or yearly?

cloud_dog

Looks good, I'll try and see if I can get this deal tomorrow.

Do you think there is likely to be a better deal shortly? I must say that interest rate looks good but is the interest paid monthly or yearly?

I don't think you need to worry too much about interest being credited monthly or annually as you will find that a monthly account will have an interest rate slightly less than the annually paid interest rate because it takes into consideration compounding.

If you can find a top rate that actually credits the interest monthly then you will be gaining but it is unlikely.

cloud_dog

blinko

although one could argue that if the base rate rises, so might products and if your stuck in a 4 year fixed it might not be the easiest thing to get out of

deemy2004

Looks good, I'll try and see if I can get this deal tomorrow.

Do you think there is likely to be a better deal shortly? I must say that interest rate looks good but is the interest paid monthly or yearly?

Interest is added annualy, as above makes no difference as the rate givem on monthly interest accounts is lower than their annual counterparts

Your unlikely to get a better rate, the fixed saving rates peaked in Sept 04, at just above 6% and have been trending lower since, this is a very good deal compared to what else is on the market. I would not be surprised if a month or two from now its 5.3% or lower.

Base rates may rise, but that does not necessarily mean that the fixed rates will rise which are governed by whats happening with the yeild curve x years out. At the moment despite rises in short-term rates the yeild curve at the long-end is falling which means lower fixed rates are likely.

The demand for this product must be low i.e. because it involves a 5 year fix, and that its an isa, as it is a too good to be true.

Its up to you, do you want to invest and forget, knowing that your locking in a 100% safe investment with no risk for the 5 year term. Or do you want to take short-ter term products betting on better rates later on ?

Even if rates go up 0.5%, thats 5.25%, I don't see long-term fixes going much above 5.75%, unless their is a big sell off in UK long dated securitites.

Crown

Thanks for your replies.

Deemy, I get your point. As I do not want to risk this money I think I will go ahead with it.

As far as im aware nothing is stopping me from opening another account in April anyhow.

Regards

Crown

deemy2004

Good show !

As the directions rates are lilkely to take next year is DOOoooooowwwwwn.