ISA Time - Alliance & Leicester / Barclays. Advice?

Nine_Lives

I've 12k which matures from a 6month Nationwide ISA in June/July

I've £5,100 ready and waiting to be thrown into an ISA of my choice

Question is .... what is my choice?

Naturally i'm looking straight at the top here: http://www.moneysavingexpert.com/savings/best-cash-isa#instant & that brings me to the 2 i've just mentioned.

For anyone who's gone through the application process - is it all smooth & trouble free? Do either of these have a history of dropping their interest rates in something daft like May?



Also, i don't fully get the whole bonus thing etc.

Alliance & Leicester: 3.2%AER with it always being 2.7% above base rate.
So i understand that 2.7% is the lowest it can be? So this isn't likely to be THE figure is it?

Barclays: 3.1% with 1% fixed bonus. What is this bonus? Does that mean it's 4.1% (i'm guessing unlikely), or is it actually only 2.1%? OR does it mean it'll not go below 1% but it could drop to 1% some point during the year?




On face value, these appear to be the ones i should be looking at, but i don't want to get caught out by the 'small print' that i don't fully understand.

scottishblondie

The A&L will track at 2.7% above the BOE base rate, which is currently 0.5%. If the base rate rises over the year (hopefully!), so will the interest rate on the ISA.

With Barclays it has a basic rate of 2.1% plus the 1% bonus for a year. Since the 2.1% is variable it could reduce or increase, but the minimum you would ever earn is 1% if they were to reduce the basic rate to 0% (unlikely). After the first year the bonus will stop and the account will only earn interest at the basic variable rate.

7sefton

Barclays is by far the easier to open an account with. It takes seconds over the phone or online (providing you have a Barclays current account), or in about 20 minutes if you need to go into a branch. In both instances the accounts open immediately and you can deposit money straight away. In my experience the service is usually quite good. AND remember that the 'bonus' is smaller on the Barclays than A&L account: in 12 months only 1% disappears from the Barclays rate whilst at least 2.7% will drop from the A&L one. This potentially is in your benefit if you forget to transfer out of Barclays after 12 months or any transfer is delayed.

On the other hand, you cannot deny that A&L at the moment pays marginally better, and also has a guarantee on the interest rate (but just for 1 year). But should the base rate move up I doubt Barclays won't pass it on, but of course in theory they could choose to hold it back. Santander's service (and A&L) is generally thought of as diabolical, and I wouldn't be surprised if they experienced delays next year as a rush of people transfer out of this account once the rate drops off a cliff.

If rates stay exactly the same, the difference is £5.10 if you invest the full allowance from day 1. Personally, I'd rather sleep at night and go with Barclays.

Nine_Lives

I would have to go in branch for the Barclays as i'm not currently with them.

Also, there'd be no chance of me forgetting to transfer out of either of them come next year. The only problem there would be if they hold up the transfer to whoever i decide to transfer to at the time. So that's not an issue (the forgetting part).


Would i need to leave it in for the full 12 month though? Reason i ask is perhaps i could transfer before the 12 months is up & not get caught up in all the transfer requests.


Who would i go to open an A&L account with? I don't remember seeing any A&L banks in my town, although there is a Santander bank.

7sefton

Yes, Santander owns A&L and offer exactly the same account. So if you want to experience Santander customer service, you can go there to open your account. Good luck!

Nine_Lives

Ahhhh stop the press!!!!

I forgot to mention one possible important nugget of information!!!!!

The £5,100 i have that's ready to get whacked into an ISA ......... i don't need to touch it for a year. I probably don't even need to touch it for 2 years to be honest.

Would you advise against BOTH of these accounts in this case?

The one that jumps out in this scenario is the Coventry 3.25% one.

To me, this could even be better (possibly) than the 2year Halifax at 3.50%??? Ok you're gaining 0.25%, but you've got to leave it in an extra 12 months & what if there's better deals in 12 month time????




I have an additional 5k that i can access (& will need instant access to - just in case), which means the ISA £5,100 i have ready and waiting doesn't NEED to be touched.




So sorry for the delayed info, but what would you advise in this (updated) case?

Help is much appreciated.

usedandabused

i opened a flexible 3.2% ISA with Santander this morning, very simple, have my ref number, and it'll all be sorted asap

Rose_Crow

Yep, I also opened an A&L account last night, got a confirmation receipt from them straight away and received my account number / sort code via email this morning while awaiting a letter. Pretty good so far

WaxiesDargle

I've just opened an A&L ISA...it took no longer than 2 minutes on-line...so far so good

Nine_Lives

That's all well & good, but my situation changed from my original post.

Well, it didn't ACTUALLY change, i just updated the info to make my situation clearer.

The £5,100 i decide to deposit [somewhere] i don't actually NEED to touch for 12 months, possibly even 24months.


Would you recommend in this case i opt for a 12month fixed rate ISA such as the Coventry one at 3.25%

Or would you recommend against this & opt for something else?

Nine_Lives

Further on the point of the Coventry one: http://www.coventrybuildingsociety.co.uk/savings/productfeatures.aspx?ProdCode=FI1Y3

Let's assume i take out that ISA
I pay in the £5,100 and i let it run its course until the date it gives next May (why not end of the tax year though???)

Interest rate then probably drops & i'll want to invest it elsewhere.


How would i go about gaining a transfer form as i've never seen a Coventry branch before & i assume it's only in Coventry?? Even if it isn't, there certainly isn't one near me.

With my Nationwide ISA, i can just walk into the branch & get a form, but what would i do in this scenario?