ISA - best rates for largish amount

jenniferpa

I have gone through the rate search engine, and had a look at various sites, but I'm trying to see if I've missed anything. My DM has around £31000 in a Halifax ISA Saver. I'm planning to convert that into a DIrect Isa at the very least but I'm also considering perhaps splitting it into two or more fixed term Halifax Isa's. This years ISA allowance will probably either go into Halifax, or the NSandI ISA (I already tried to do this, but due to some communication problems the appropriate forms didn't get signed so I've got to sort it out again). Anyway, my question - is there anyone who does a better rate on a large ISA, either fixed term or not? Due to the logistics of this, I don't think I'd bother to move it for .05% but I'd consider it for .25%. I would rather that the whole £31000 wasn't locked up for more than a year, although some of it could be. Also, and this is going to sound morbid, does anyone know what happens in the event that DM dies before the end of the fixed ISA term? Can it simply be kept in that ISA until the end of the term, or does it have to be cashed immediately (and thus lose the interest). This doesn't really matter, but I have wondered about that.

Jennifer

Debt_Free_Chick

jenniferpa wrote:

Anyway, my question - is there anyone who does a better rate on a large ISA, either fixed term or not? Due to the logistics of this, I don't think I'd bother to move it for .05% but I'd consider it for .25%.

I can't say I've ever seen a tiered interest rate for an ISA - a tiered interest rate meaning that you got a higher rate for larger balances.

I would rather that the whole £31000 wasn't locked up for more than a year, although some of it could be.

A CAT standard ISA has to allow you instant access. Most other ISAs also give instant access, but some mean that you lose any bonus rate if you don't keep it for a year. I think you need to look at the T&Cs of each one carefully.

The Halifax Fixed Rate ISA doesn't seem to penalise early withdrawal, however. It seems you can close the account at any time and simply get the interest, at 5%, for the period for which you've held the account. So if you choose a one-year fixed rate and close the account after 6 months, you simply get 6 months interest at 5%. Note that part withdrawals are not allowed - you have to close the account (or, presumably a transfer is allowed )

The NS&I ISA seems to be a straightforward ISA with a simple guarantee to pay 0.55% over base rate until April 2008. Again, no loss of interest if you close or withdraw all or part of your money.

Also, and this is going to sound morbid, does anyone know what happens in the event that DM dies before the end of the fixed ISA term? Can it simply be kept in that ISA until the end of the term, or does it have to be cashed immediately (and thus lose the interest). This doesn't really matter, but I have wondered about that.

Jennifer

It must be closed as the executor of the estate needs to convert all assets into cash and then pay them out in accordance with the will.

However, with the two accounts you are looking at, there is no loss of interest. You get the interest for the days that the account has been open and this will be added to the balance when the account is closed. Obviously, you don't get any interest that would have been paid, if the account had remained open - but there is no loss of interest, as such.

HTH

meanmachine_2

Debt_Free_Chick wrote:

I can't say I've ever seen a tiered interest rate for an ISA - a tiered interest rate meaning that you got a higher rate for larger balances.

Most banks have them, don't they? A&L do, for sure. (Scroll to cash isa rates)


http://www.alliance-leicester.co.uk/savings/index.asp?page=rates&ct=savingsmenu

jenniferpa

Halifax has tiers also. I'm suprised that you don't think that closing a fixed rate isa would be penalized. It says that closing it early results in a loss of interest. I'll have to delve deeper to see what that loss would be.

Jennifer

Zwicky

Debt_Free_Chick wrote:

The Halifax Fixed Rate ISA doesn't seem to penalise early withdrawal, however. It seems you can close the account at any time and simply get the interest, at 5%, for the period for which you've held the account. So if you choose a one-year fixed rate and close the account after 6 months, you simply get 6 months interest at 5%. Note that part withdrawals are not allowed - you have to close the account (or, presumably a transfer is allowed )

It certainly does penalise early withdrawal. From the Halifax web site:

Quote
No additional deposits or part withdrawals are allowed during the chosen term.
Early closure or transferring out to another ISA manager is allowed with loss of interest.
Quote

If you don't want to leave your funds alone for the fixed rate period do not take a Fixed Rate ISA.

Sillychuckie

But can we really classify a death (and forced closure) in the same bracket as a withdrawal? Best ask the bank really, I'm certainly not sure if they would penalise under these circumstances. It really wouldn't be fair if they did.

Careful_ly

Nat West and Barclays have a tiered ISA on 5% variable for this sort of savings, if you think interest rates are going to rise this may be better than the Halifax fixed rate.

isasmurf

Woolwich, Barclays, HSBC (existing customers only) and NatWest all offer 5%AER for balances of £31k according to Moneyfacts.

jenniferpa

Thanks for that link. She's an existing HSBC customer, but not a plus or premier one, so that seems to rule that out. Still, I was right that 5% is the most she's going to get at the moment. I think I might just move some into a halifax fixed rate 1 year, and the rest into the new 4 year after June 1st.

Many thanks everyone.

Jennifer

codetown

I believe you cannot 'split' an existing ISA.
Some organisations will allow you to transfer your past allowance, but I think this means all in a block and not splitting part of it.

I have not knowledge of the halifax ISAs, but 5% interest looks very close to top today. I think only some A&L customers who are part of a bonus which went on from jan to march are now getting 5.2%; most other banks are around 5% or below.

jenniferpa

Really? I think you can. I had a conversation with HSBC in March about the possibility of doing this and they didn't have any issues with it (although, frankly, it's not something I would rely on). Why wouldn't you? After all, my understanding is that, although it looks as if it's all in the same place, each years allowance is in a separate ISA "wrapper". Can anyone confirm this one way or the other?