ISAs and FIXED Rate Bonds 28 October 2009 at 12:43PM edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings 7 replies 749 views

hairclip_2

Quck question folks...
Are ISAs the same as fixed rate bonds...I have a cash ISA that i pay into monthly, crap rate...was looking at a 5 year fixed bond with a great rate...is that an ISA?

Also if i take out a 5 year fixed bond and transfere my ISA over to it, can I still put money into my new bond monthly?

Lokolo

It might be an ISA, it might be not. Have you got a link to the product? Most of them make it clear it is an ISA though, so I suspect it is not.

Most fixed ISAs do not allow additional deposits, so once you have put money in, you cannot put more money into it.

Baldur

'Bond' is a word that's currently misused by many banks'/building societies' marketing departments to describe what are basically just fixed rate/fixed term savings accounts (whether ISA or not).

You can have Fixed rate ISAs/ISA Bonds or you can have taxable 'Bonds'. If it doesn't say that it's an ISA, it's almost certainly not.

See this post for 5-year fixed rate ISA 'best buys'.

<Edit> Lokolo's comment about additional deposits applies to most taxable fixed-rate accounts/'bonds' as well as to fixed-rate ISAs - although there are a few exceptions for both types.

hairclip_2

http://www.ybs.co.uk/savings/online/ebond/index.html
This is the link...theres no mention of it being an ISA that i can see...so I guess it aint?

Baldur

hairclip wrote: »

http://www.ybs.co.uk/savings/online/ebond/index.html
This is the link...theres no mention of it being an ISA that i can see...so I guess it aint?

No, it's taxable.

See the link that I gave earlier - up to 4.60% on 5-year Fixed-Rate ISAs/ISA 'Bonds'.

The YBS one in your link would be 4.24% after basic rate tax.

hairclip_2

gotya...so you could put a lump sum into something like this and still run an isa yeah?

Baldur

hairclip wrote: »

gotya...so you could put a lump sum into something like this and still run an isa yeah?

They are ISAs but, as both Lokolo and I have said, most will not allow additional deposits after the opening amount, except by transfers of previous tax years' ISAs, where accepted.

If you pay new money in, the account IS your Cash ISA for the current tax year and you can't subscribe to any other Cash ISA until 6th April 2010 or later.

The_Enforcer

If you choose to subscribe to a fixed rate ISA with a lump sum, thus using up your ISA subscription for this tax year, but after this you are able to set aside further monthly payments, you may wish to consider opening a regular savings account. This would run for a year and currently will pay up to 4% after tax for lower rate tax payers, which beats most ISA rates. You do have to commit to payments and are unable to make withdrawals without penalty during the year. Upon maturity, this money can then be used to fund your ISA subscription for the following tax year.

More details about regular savers here: http://www.moneysavingexpert.com/savings/best-regular-savings-accounts