Does anybody else here find Isas a joke?

lightSwitch_3

After opening my first ISA I noticed that Abbey took no more interest in it or me. I get junk mail from them over the year but nothing about what is going on with my ISA - its current rate, where I can move that money at the end of the tax year and earn better returns etc. I opened a second ISA with them, or so I thought, but then found out that they just put the money in the original ISA which was earning nothing. Remember all banks would like your money for free.

Anyway, What they do is ridiculous. The high headline rates don't allow you to bring in money from last year's ISA so you leave last year's money in that ISA earning nothing or close it down and put only £5100 in a new ISA from, in my particular case, what could have been a possible total of £7200 + int earned + £5100. They allow you transfer from previous ISAs if you put your money away for 4 years and buy shares.

So the government has offered us a tax free savings account but the banks pu$$y foot around it.
What is so objectionable the banks in allowing you to accrue your tax free savings in a single ISA account? It is clean and simple.

The way they've fix it with ISAs, it is better to put more money in a high interest account and pay tax on it.

The maximum of about £34,000 that you could have in ISAs since 1999 is really no big deal if you couldn't accrue each year.

Conclusion
ISAs are just a way of banks controlling your money and giving you less in return than was intended. Typical bank bull$h1t.

Aegis

Or you could:

a) transfer to a provider which accepts such payments, some of which actually offer pretty good rates
b) transfer cash ISA holdings to a stocks and shares ISA rather than trying to accrue tens of thousands in cash over a decade or more

In short, vote with your feet and move to a different account. Shop around. ISAs really aren't all that different to any other savings account, banks like to offer high rates for new money while gradually reducing the rate on old money because of the general apathy that people have about their savings interest.

noh

Plenty of providers offer transfers in with good rates.
see:- http://forums.moneysavingexpert.com/showthread.html?t=401374

Spiggle

lightSwitch wrote: »

After opening my first ISA I noticed that Abbey took no more interest in it or me. I get junk mail from them over the year but nothing about what is going on with my ISA - its current rate, where I can move that money at the end of the tax year and earn better returns etc. I opened a second ISA with them, or so I thought, but then found out that they just put the money in the original ISA which was earning nothing. Remember all banks would like your money for free.

Anyway, What they do is ridiculous. The high headline rates don't allow you to bring in money from last year's ISA so you leave last year's money in that ISA earning nothing or close it down and put only £5100 in a new ISA from, in my particular case, what could have been a possible total of £7200 + int earned + £5100. They allow you transfer from previous ISAs if you put your money away for 4 years and buy shares.

So the government has offered us a tax free savings account but the banks pu$$y foot around it.
What is so objectionable the banks in allowing you to accrue your tax free savings in a single ISA account? It is clean and simple.

The way they've fix it with ISAs, it is better to put more money in a high interest account and pay tax on it.

The maximum of about £34,000 that you could have in ISAs since 1999 is really no big deal if you couldn't accrue each year.

Conclusion
ISAs are just a way of banks controlling your money and giving you less in return than was intended. Typical bank bull$h1t.

I'm no financial wizard but I think you may need to look at the various advice pages on MSE regarding ISAs. You can transfer your balance to other providers without impacting on this years allowance (£3600/5100 from 6/4/10).

So if you had £7200 + interest in one providers ISA (paying a rubbish rate)on 4th April 2010 and found a better interest rate with another provider you could open an account around that date (or any time of the year really but nearer to 6th April maximises benefit) meaning you can put £5100 of new money in to the account either on 6th April or at any time between then and 4th April 2011.

If the new account also allows transfers in you could transfer the £7200 + interest into that account WITHOUT affecting the £5100 allowance for the year.

If it doesn't allow transfers in then you find the best paying ISA account that does allow them and transfer your £7200 + interest to that again NOT AFFECTING YOUR £5100 allowance for the 2001-2011 tax year.

Hope that helps with your confusion.

JamesU

LightSwitch, Do not agree with your reasoning, but feel you have highlighted points that definitely regard attention, especially for those less familiar with cash ISA investments.

lightSwitch wrote: »

I opened a second ISA with them, or so I thought, but then found out that they just put the money in the original ISA which was earning nothing. Remember all banks would like your money for free.

And you let them do this. It's your fault for not watching things more carefully, and using the options you have such as transferring to a different provider. Learn from it.

lightSwitch wrote: »

Anyway, What they do is ridiculous. The high headline rates don't allow you to bring in money from last year's ISA so you leave last year's money in that ISA earning nothing or close it down and put only £5100 in a new ISA from, in my particular case,

So they do not show customer loyalty. As Aegis rightly said, vote with your feet and find a better provider elsewhere. And do not go back to them unless they start offering more sensible terms.

what could have been a possible total of £7200 + int earned + £5100. They allow you transfer from previous ISAs if you put your money away for 4 years and buy shares.

So they do not provide the product you want. So why stay with them? Find an ISA provider that offers what you want and the link provided by NOH is updated regularly. You have the option to transfer from them any time you want. BUT DO NOT CLOSE ACCOUNTS, TRANSFER THEM TO THE NEW PROVIDER, or you will loose the tax wrapper on the cash.

So the government has offered us a tax free savings account but the banks pu$$y foot around it. What is so objectionable the banks in allowing you to accrue your tax free savings in a single ISA account? It is clean and simple.

You do not need to have just one account and can transfer cash ISAs when you like (but these days there are penalties if you have not met the opening T+Cs or could loose interest, check first). If you did not understand these options, this in not the banks fault.

The way they've fix it with ISAs, it is better to put more money in a high interest account and pay tax on it.

I think you will find the same tricks being played not just with cash ISAs but other savings accounts too.

The maximum of about £34,000 that you could have in ISAs since 1999 is really no big deal if you couldn't accrue each year.

For quite a few years it has been possible to get good interests rates on cash ISAs and have good flexibility to switch aswell (e.g. rates as high as 6.0 - 6.5% were possible). Only more recently is it true that the interest rates on most cash ISA accounts are not keeping up with inflation. And a lot of people are investing elsewhere because of this.

Conclusions:

You are letting the banks control your money when you should be controlling your money.

Until more people stop banks doing this by voting with their feet, they will continue to do it.

You are not forced to take out sub-optimal products. It is your money and your choice.

And yes there are a lot of vunerable people that get the short end of the stick as you have described above. Many do not understand the financial products, do not know how to use the internet to get better offers, and have little option other than the high street providers where they may be offered sub-optimal services and products. For sure, I find this frustrating and outrageous when it involves vunerable investors, but you do not need to be one of them.

JamesU

lightSwitch_3

Thanks guys for the response.

Yes, I realise now that I can move past invested money around but, they don't make it easy for novices for cynical reasons and, the question still remains, why don't the simplify the process?
The idea is, the goverment wants us to save money and get a decent return on that money. So, if Bank X is offering 3.5% for this year's ISA then they should allow you to put previous years' moneys in there as well. But most of them don't because they want you to get no benefit for last year's loyalty. How nasty is that?
@ JamesU,
nice analysis. I understand that I could have fixed it with abbey earlier on but, because they told me they would take care of everything, just sign on the dotted line, i didn't bother checking until many months later - I should never have been put in this situation in the first place though. They won't be getting my money again.

The difference with other savings accounts (except bonds) is that they don't stop you from transfering into it and, if the rate is 3.5%, then that is what you will get for the new money too. As you said, ISAs are just savings accounts but for some reason they force you to dance the Tango once a year for a measley saving of 20% on current 2-3% int.

JamesU

lightSwitch wrote: »

Thanks guys for the response. why don't the simplify the process?

Banks are a business and hence make money. That's why it is not in their interest to change things unless they are forced to.

The government/FSA/OFT should do somthing about this. But will they? Soundbites on TV will allude to the need for sensible saving by "hard working indivuals, hard working families and to secure those in retirement that have contributed so much to society etc etc." Reality is, any government needs society to spend right now rather than save in order to boost the economy so do not hold you breath on any action here, even with ISA "supercomplaints." Ironically cash is supposedly the most liquid form of asset and liquidity is important for a good economy (remember why the banks went down? why businesses fold? why people would like to buy homes but cannot get the mortgages?). This artificial loss of cash liquidity in financial products irrespective of whether they be billions tied up in cash ISAs, savings accounts, with profits bonds etc, is not good for individuals or the economy. The government has not got a hold of this problem.

lightSwitch wrote: »

They won't be getting my money again

Great, a step in the right direction for you individually and it will help everybody else too. Inform your family and friends to do the same, especially if you know of elderly that are less informed and could do with a bit of help.

Interesting thread. Thanks.

JamesU

lightSwitch_3

@JamesU,

Yes I believe you are correct in saying that the chancellor wants us to go out and spend in this current environment. ISAs, as they are structured, especially with the stock option actually encourage individuals to save more than and tie up far longer than they may intend. This was at least my experience with two banks. Obviously they want to hold your money for longer so they can lend more for longer. This is OK but just be straight with these ISAs and stop manipulating them against as.

lvader

Banks are currently ripping people off and the government is allowing them to do so, it's a scandal. The law should change to force banks to to act more fairly; some examples would be that they must accept transfers on all ISA accounts, have a single intreest rate for all customers regardless if the ISA is new money or old and require banks to inform customers in writing when interest rates change.

Kay_Peel

I am fed up with cash isas too.

You really have to be pro-active and prepared to go through a lot of hassle with transfers to make sure that your pot keeps up with inflation.

In the drive to attract new customers, the providers con them with introductory bonus rates which fall dramatically at the end of the promotional period. Loyal customers are not valued at all: if they are not observant and on top of their interest rates then their savings stagnate or fall below inflation.

You have to have the energy and determination to beat the providers at their own game. You have to upsticks and leave and chase better rates, year after year.

It's just so wearisome.

Inforapennyinforapound

lightSwitch wrote: »

So is your neanderthal response.

Lightswitch take no notice of that moron.

Take a peek at other posts he/she has made.Nothing useful just sarcasm and mickey taking.

I think your query has been sufficiently covered so have nothing to add,just defending you.