Halifax ISA Direct Reward Question

MOPI

Hi does anyone know what the rate of this account is based on - at the moment it is stated as 2.60% however is part of this the Bank of England base rate with the rest being a 'bonus rate' or is it just random and basically can change at any time if Halifax wanted to do so?

I did try and ask this question to someone at Halifax via the telephone banking however they kept thinking I wanted them to predict the future of the Bank of England Base Rate!!!

Thanks in advance!

tipsychick

Hi Mopi

It's a variable rate, which means it can go up or down whenever Halifax choose.

Just in case you don't know, this time last year they had a very popular 3% fixed rate Direct Reward ISA. Apart from the rate being 0.4% less, this time round the main difference is that the rate is variable. It's not a bad ISA but not market leading and I think may have been introduced to stop a mass exodus of money from people coming off the earlier 3% deal.

I had that one and transferred to the new 2.6% rate last week, mainly for ease of transfer. I'll be keeping a close eye on the rate though because I don't think they'll have to write to inform you that they're dropping (or raising) it. The CSA I spoke to said the management hadn't clarified this point but he and I both thought they wouldn't be obligated to legally.

MOPI

Hi I am in the same position - I had the 3% one, which is coming to an end in the next 5/6 days. I think I will save the hassell of swapping banks and just switch to the 2.60% with Halifax also.

Can I just check - if I swap my ISA to the 2.60% account with Halifax before the new tax year that doesn't mean I can open a new ISA, with a different bank for my new tax free allowance for the 2010/2011 tax year?

tipsychick

Transferring your old ISA to the 2.6% rate won't affect your 2010/11 allowance, which you're free to use with whatever provider you like from 6/4/10.

If you call the Halifax on the date that your 3% one matures, they can transfer it internally for you. It apparently takes a couple of days to show online but the interest is backdated.

rb10

The rate is variable, so could potentially change.

However, there are two points here:

(1) When Halifax have had high rate variable accounts in the past, they haven't just steadily reduced the rate. I would be very surprised if this account did anything other than track the Base Rate.
(2) The Base Rate is only likely to go up, so I'd expect the rate on this account to go up in line with that.

Just remember to review it in a year - when otherwise, the rate drops to 0.5%.