Abbey Fixed Reward Saver, Opinions please

LindaMary

Last year I was lucky enough to get the above account paying 5% plus 1.5% bonus after the 12 months if no withdrawals (monthly interest). This year they are offering me 2% plus 1% bonus if I leave my savings in the account for the next year. Hell of a drop in rates but better than their 12 month fixed bond which is now at 2.75%.
I will be getting less each month this way but will get the bonus at the end of the year so it still works out at 3%. Should I go with this, as no hassle moving the money but they are also offering a fixed 2 year bond at 4.2%? I feel rates may move up eventually and am wondering to play it safe with just a years fix rather than tying it up for 2 years. I am non tax payer! What do people think, stick with the offer they have made me or go for the 2 year bond?

BenL

Are you over 50 for the extra ISA tax limit? or used up the current years entitlement?

Baldur

There are a number of 1-year fixes which offer better rates than A&L - http://www.moneyfacts.co.uk/money/savings/1/short-term-fixed-rate-bonds.aspx

LindaMary

No I am under 50 and don't pay tax. My current ISA is still fixed at 6% until the end of the year. Have no extra money to add to an ISA at the moment as savings are all in fixed rate accounts. I cannot get a better interest rate on an ISA than I can elsewhere and I receive interest gross anyway.

LindaMary

Baldur wrote: »

There are a number of 1-year fixes which offer better rates than A&L - http://www.moneyfacts.co.uk/money/savings/1/short-term-fixed-rate-bonds.aspx

Non of which seem to offer me monthly interest which I use to top up my income

Baldur

LindaMary wrote: »

Non of which seem to offer me monthly interest which I use to top up my income

The SAGA 1-year bond @ 3.75%AER (3.69% Gross) is monthly and specifies that the interest must be paid away.

<Edit> Just read your post above, re: under 50.

Ifts

Birmingham Midshires Internet 2 Year Fixed Rate Bond pays Monthly Interest (4.17% gross / 4.25% AER* for 2 years) - Also available as a postal account paying same rate.

LindaMary

Ifts wrote: »

Birmingham Midshires Internet 2 Year Fixed Rate Bond pays Monthly Interest (4.17% gross / 4.25% AER* for 2 years) - Also available as a postal account paying same rate.

Ah but is it worth locking the money away for 2 years as rates may rise some people have said! I can do the same with the Abbey 2 year bond.

Ifts

LindaMary wrote: »

Ah but is it worth locking the money away for 2 years as rates may rise some people have said! I can do the same with the Abbey 2 year bond.

True 4.17% is a little less than Abbey's 4.20%, and you would have no hassle moving the money.

With the Birmingham Midshires your money is tied up for the full term, however withdrawals are allowed subject to 90 days loss of interest on the amount withdrawn.

All depends if you think you might need access to your funds.

LindaMary

Ifts wrote: »

True 4.17% is a little less than Abbey's 4.20%, and you would have no hassle moving the money.

With the Birmingham Midshires your money is tied up for the full term, however withdrawals are allowed subject to 90 days loss of interest on the amount withdrawn.

All depends if you think you might need access to your funds.

Our ISA's are with BM and putting the other money over to them would take me over the savings protection limit. Its a pity as BM have been great to deal with.