M&S Money 4% ISA

RP72

The M&S 3 year fix ISA at 4% looks rather good for those with larger transfers in as there is only a £100 penalty for closing the account, ie 1 months loss of interest if you put in £30,000. (I presume transferring out is closing the account).

Anyone have any experience with M&S Money? Any reason why I shouldn't move both my and my wife's ISAs here? - we have £30,000 each.

lisyloo

The only downside to this account is the fact that interest rates will probably rise in the 3 year timescale.
However for your amount, the penalty is relatively small.

I'm taking my chances with FD at 3% for 12 months which has no penalty.

It all boils down to what you think you'll get elsewhere in 2011 and 2012.

RP72

I figure that I'd need to wait until there was an ISA offering 4.5% which isn't a long term fix with the usual 180+ loss of interest before needing to move from this M&S offering.

lisyloo

So do you think a base rate rise from 0.5% to 2% is not likely?

It's really difficult to know what to do for the best.
If you go to M&S then there is an advantage that you don't have to xfer next year whereas FD moves to 0.2%.
However from a base of 0.5% I think it's entirely possible for rates to go up reasonably quickly.
I don't mean to 10% or 15% or anything silly like that.
But 3%, 4% or even 5% is quite conceivable.
I also think that margins on both mortgages and savings will come down.

I really don't know to be honest, that's why I've stuck with the less risky option that I can retreat from at no cost.

Not sure you will get much more help on future interest rates, because at the end of the day it's a gamble. May as well discuss the lottery numbers or who will win the grand national.
But as you say your risk is limited to one months interest, so if things move against you, then you can xfer.
Don't forget also that you lose some days on xfer due to postage, but FD has to be xfered next years anyway.

Joe_Bloggs

You do not have to transfer all of your existing cash ISA funds to a new provider. You can transfer part of the money. Thus you can consider splitting your existing money between between multi year fixed rates and those that are instant access/penalty free and variable.

I transferred part of a cash ISA to a fixed ISA within the same provider. I thought it was worth hedging the risk and having a mixture of fixed and variable.

There are often a lot of restrictions surrounding transfers in that rule out a lot of potential deals.
J_B.

Stompa

RP72 wrote: »

(I presume transferring out is closing the account).

I'd have thought so, but it would make sense to check with them before proceeding.

Porcupine

I've emailed them twice over the last few weeks asking whether transfers out are allowed under the £100 fee, and apparently 'the Savings and Investment department will be in touch'. They haven't been. I want to get this in writing before committing myself to anything.

I put the numbers into my spreadsheet about whether it's better to go for the Manchester BS account at 4.51% with a 90 day interest penalty. The Manchester account including fee takes 9 months to beat the current highest rate of 3%. The M&S account, for amounts of £5K, 10K, 20K, 30K and 40K, including fee breaks even at 23, 11,6, 5 and 4 months respectively.

RP72

Seems that Manchester BS account paying 4.51% has already been withdrawn.

I rang M&S Money today and was told transfers out are definitely allowed under the £100 fee. When I asked if she was sure, with no hesitation she told me she was 400% sure. I also took the liberty of recording the conversation just in case.

savit4l8er

Porcupine wrote: »

I've emailed them twice over the last few weeks asking whether transfers out are allowed under the £100 fee, and apparently 'the Savings and Investment department will be in touch'. They haven't been. I want to get this in writing before committing myself to anything.

I woud expect that is it "highly" probable you can transfer out but I did wonder this last night. If you get a response could you post it.

Porcupine

From: Internet dot Investments at mandsmoney dot com
Dear Porcupine

Thank you for your email.

I can confirm that transferring out from the Fixed Rate Cash ISA to another
provider or to our Advantage Cash ISA would still attract the withdrawal
charge.

If you would like further information about our Advantage Cash ISA or any
of our other Savings products please let us know by return email and we
will be happy to send you an information pack.

If you have any queries please contact our Savings and Investments
Department on the free phone number quoted below.

Yours sincerely

Liam Moore
M&S Money
Savings & Investments Department
Kings Meadow
Chester Business Park
Chester
CH99 9UT

That wasn't the exact question I asked but it does imply transfers out are allowed.

And M&S money is operated by HSBC.

savit4l8er

Thanks Porcupine,

I rang them them previously and they confirmed transfers out are OK subject to the fee but nice to see it written.

They pay interest right up to the closure or transfer.

I like this one for the straight fee.