Opening an ISA

Craig2010

Thinking on opening an ISA with Alliance & Leicester taking advantage of their 3.50% deal. Should i wait until the next tax year, or open it now?

evenasus

I would open now, as that rate might not be available for the 2010/2011 funding.
You can always open another after April 6th.

OneADay

2 Years fixed upto 1st April 2012 at 3.5% - not great I say.

I would suspect its only available for 2009-2010 and the rate is not great over two years - you would hope better rates available in 12 months.

I plugged my current dosh of cash Isa into M&S 3 year fixed deal paying 4%.
Withdrawal allowed but would cost £100 but my dosh is such that it makes sense as I can recoup the £100 in a month :-)

For next years allowance, I would hold fire till April before committing to anything.

G_M

OneADay wrote: »

2 Years fixed upto 1st April 2012 at 3.5% - not great I say. ..For next years allowance, I would hold fire till April

1) A&L 3.5% is NOT "2 Years fixed upto 1st April 2012" it's instant access. *
2) No option for next year's allowance - you HAVE to 'hold fire' till April!!

Open the account now with £3,600 (£5,100 if you are 50+), then add the same again in April as the 3.5% is guaranteed, unless an even higher rate appears elsewhere at that time.

*With our Flexible ISA you’ll never earn less than 3.50% AER tax free (variable) for 12 months
Penalty free withdrawals.

rb10

OneADay wrote: »

2 Years fixed upto 1st April 2012 at 3.5% - not great I say.

I would suspect its only available for 2009-2010 and the rate is not great over two years - you would hope better rates available in 12 months.

I suspect that you are talking about a different account to Craig.

I expect that Craig is asking about the Flexible ISA, which pays a variable rate (currently 3.5%) for a year.

The answer to the original question is: you can wait a couple of weeks to see if anything else becomes available, but if it was me, I would go for it now.

OneADay wrote: »

For next years allowance, I would hold fire till April before committing to anything.

You cannot possibly commit to any of next year's allowance until 6th April.

OneADay

Yep I was thinking about the fixed rate offer, my mistake.

Still not great though as a variable rate. I opted for A&L in Jan 09 when rate was same as now I think and had to shuffle the money out in Aug 09 when the rates were dropped down.

I just do not trust A&L to keep their rates static (well you cant trust any provider I suppose).

Stompa

OneADay wrote: »

I just do not trust A&L to keep their rates static...

The rate is guaranteed not to fall below 3.5% for 12 months, and should the base rate rise then it will increase correspondingly.

dzug1

rb10 wrote: »

You cannot possibly commit to any of next year's allowance until 6th April.

Some providers will let you pay now, hold your cash outside an ISA until 6 April, and open it then.

Not A&L that I know of though.

alastair_h

Stompa wrote: »

The rate is guaranteed not to fall below 3.5% for 12 months, and should the base rate rise then it will increase correspondingly.

The rate is guaranteed to stay 3% above the Bank of England base rate for 1 year from opening. So if the current rate reduced from 0.5% (now) to 0% for example the A&L rate would be 3%.

https://www.alliance-leicester.co.uk/savings/flexible-isa.aspx?cm_mmc=mybank-_-ibh-_-listflexibleisa

Stompa

alastair_h wrote: »

The rate is guaranteed to stay 3% above the Bank of England base rate for 1 year from opening. So if the current rate reduced from 0.5% (now) to 0% for example the A&L rate would be 3%.

https://www.alliance-leicester.co.uk/savings/flexible-isa.aspx?cm_mmc=mybank-_-ibh-_-listflexibleisa

Their tagline is: "We guarantee you’ll never earn less than 3.50% AER tax free variable for 12 months".

alastair_h

Stompa wrote: »

Their tagline is: "We guarantee you’ll never earn less than 3.50% AER tax free variable for 12 months".

Yes your right it does say that, well spotted. Even better then, thanks.

How does the base rate tracker work?
Example: During the first 12 months if the Bank of England base rate increased by 1.00% the Flexible ISA interest rate would increase to 4.50% AER tax free (variable). If the base rate was then to decrease by 1.00% your rate would return to 3.50% AER tax free (variable). If the base rate decreased again your rate would not go below 3.50% AER tax free (variable), allowing you to enjoy the certainty of a minimum rate whilst still benefiting from base rate increases.