Can Martin Lewis please sort out ISA's?

fedupjon

I am absolutely fed up with banks/building societies offering interest rates on their standard accounts which are greater than on their ISA accounts.
eg currently Cheshire 1 year fixed rate account is 3.75% yet their 1 year ISA bond is 3.00%. The list goes on and on.

In my opinion there is absolutely no justification for this. I have a simple solution to this which is to allow individuals to nominate their own ISA account using any savings account. I accept there may be a bit more admin but this would prevent the building societies from short changing us and would open up the market. Since we can not take the savings out of the ISA system (as we would loose the tax free status) we are effectively stuck. Afterall, if the aim was to encourage saving shouldn't we have access to the best rates?

Also, I do not think they should be allowed to not accept transfers from other ISA's - Even when they do the rates are not as good. While the admin is greater (and could really do with being simplified) this is just an excuse for making it difficult for people to shop around for the best rates.

If Martin is out there somewhere could he please try to sort this out? Otherwise, there is a real danger that ISA's will be all but dead.

KingL

He'll get to it when he becomes Chancellor.



Of course, in your example, with the tax breaks, the standard tax payer using the ISA is getting the same net interest as if he used the taxed account. Higher rate tax payers are better off with the ISA.


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RayWolfe

I think he will find it easier to AFTER he is deified.
Then he can work for world peace and the abolition of hunger at the same time as getting all the banks to love their depositors.

dunstonh

In my opinion there is absolutely no justification for this.

Theoretically there is.

ISA contributions are capped by the limit and typically attract small balances. Yes there are increasing numbers of larger pots compounded over the years but on average the pot is small. That makes the cost of running vs the profit lower.

Also, the administration with an ISA is greater than a normal savings account. Not so much as it used to be and computerisation has taken care of most of that. However, the mid term increase in the ISA allowance for over 50s has created a lot of problems for some companies regarding reprogramming their computers to allow the transactions to take place. Some ISA providers are still not ready on this front. All this creates costs that a normal savings account would not have.

Refunding of dual ISA contributions creates a cost that a normal savings account wouldnt have.

Recording of ISA allowances to report to HMRC creates a further cost as well.

So, theoretically, the rate should be a tad lower.

bristolleedsfan

I agree with O/P, :T the argument about non ISA higher maximum balances would carry weight if the non ISA fix had higher minimum investment than its ISA version, no additional investments during the year destroy other arguments, Newcastle BS offered same 5% rate on both its recent ISA and non ISA accounts 5 year fixed rate accounts so other organisations should offer at least similar rates IMO.

http://www.thecheshire.co.uk/investment-saving-account/fixed-rate-bonds/fixed-rate-bond-12-month.asp

http://www.thecheshire.co.uk/investment-saving-account/individual-saving-account/12-month-fixed-rate-cash-isa-17th-issue.asp

john_s_2

They'll pay the rates that will attract the number of customers they want. Once they've got enough they put the rates down. Once too many customers have left they announce a new account with a higher rate. And repeat ad infinitum.

Very simple, and if they'd stuck to doing just that they wouldn't have ****ed up the economy.

Andystriker

What I would like to see is an easier Transfer of ISA's from one Bank/BS to another.

Why can't they have some sort of special chq Book where your National Insurance number is printed on the chq?

The current system puts me off moving my ISA.

Andy

bristolleedsfan

Andystriker wrote: »

What I would like to see is an easier Transfer of ISA's from one Bank/BS to another.

Why can't they have some sort of special chq Book where your National Insurance number is printed on the chq?

The current system puts me off moving my ISA.

Andy

An "easier" ISA transfer system would be one that doesnt involve cheques.

greenface

Martin is busy decorating or spare room then he has a country to mend. He'll get round to it /

sss555s

This is a good subject and i think there should be a few things changed in the way ISA's are operated.

For me the biggest con is that you take out a "issue 4" at say 4% at the start of the financial year then 6 months later when they have all the money in they start a "issue 5" at the rate 4 was at then drop issue 4 to 1%. :mad:

The banks know most people don't check their rates every week and people are misled by the headline rate of the new issue often so i feel the banks are benefiting from deception to some degree.

Why can't they all just have 1 cash ISA product each and adjust the rate of that accordingly?

KingL

See post #6 !

To quote from one Martin Lewis: A company's job is to make money; it is NOT there to help you, it is NOT your friend