ISA matures on 31st May 2011 ? - why ?? Loss of interest maybe

Mickygg

financequest wrote: »

Very interesting !. I am sure this will not surprise you !. If you raise a question on the MSE forum that challenges possible sharp practice by any of the various financial institutions, it is virtually guaranteed that numerous replies quickly arrive, defending/championing, or raising confusing doubts about concerns re the questionable practice in question. If you take a few moments to look at previous forum updates from some of these characters, it often becomes glaringly obvious that they have either a vested interest, or run the business in question. Not a conspiricy theory, have a look for yourselves.

Typical case of trying to dig yourself out of a hole when you have misunderstood that fixed until 31st May 2011 means just that. As said above, if 31st May is such an unhappy date for you, go with another - A&L 3.2%, Barclays 3.1%......they will run for a year and miss that awful 31st May.

Mikeyorks

financequest wrote: »

Not a conspiricy theory, have a look for yourselves.

Why do you consider the 6th April to be some sort of date that's cast in stone? As most providers suffer a massive peak of activity at this time .... perhaps get your mind around the fact that trading off some activity to 31st May makes some commercial sense in reducing the peak (and padding the trough). Whilst not actually disadvantaging the customer in the way you have (twice) misinterpreted.

financequest

Done the basic maths. Fixed rate ISA over 2 years (104 weeks)

Provider A. Offers 3.25% on 6th April 2010 and insists 31st May 2011 maturity.
Provider A. Offers 1.25% on 6th April 2011 and insists 31st May 2012 maturity.

Provider B. Offers 3.25% on 6th April 2010, matures 5th April 2011.
Provider B. Offers 1.25% on 6th April 2011, matures 5th April 2012.

Provider C. Offers 1.25% on 6th April 2010, matures 5th April 2011
Provider C. Offers 3.25% on 6th April 2011, matures 5th April 2012.

ISA transfers typically take 4 weeks, during this time, interest may not be paid.

Scenario 1.
Invest in fixed rate 1 year ISA for 2010/2011 with provider A, then re-invest in a further fixed rate 1 year ISA for 2011/2012 with provider A.
ISA taken out on the 6th April 2010 matures on 31st May 2011 (59 weeks after start of tax year) irrespective of date account opened.Funds cannot be moved until after that date. This leaves 45 weeks remaining to end of tax year 2011/2012.
5100 invested 6th April 2010 @ 3.25%
Up to 31st May 2011, interest 3.25/100*5100*59/52 = 171.56
Total ISA now worth £5271.56
Tax year 2011/2012 rate drops to 1.25%, so
Up to 5th April 2012, interest 1.25/100*5271.56*45/52 = 52.02
Total ISA now worth £5323.58

Scenario 2.
Invest in fixed rate 1 year ISA for 2010/2011 with provider A, then transfer to provider C on 1st June 2011 for a fixed rate 1 year ISA for 2011/2012. After 4 week delay, that leaves 41 weeks remaining in the 2011/2012 tax year.
5100 invested 6th April 2010 @ 3.25%
Up to 31st May 2011, interest 3.25/100*5100*59/52 = 171.56
Total ISA now worth £5271.56
Up to 5th April 2012, interest 3.25/100*5271.56*41/52 = 123.23
Total ISA now worth £5394.79

Scenario 3.
Invest in fixed rate 1 year ISA for 2010/2011 with provider B, then transfer to provider C on 6th April 2011 for a fixed rate 1 year ISA for 2011/2012.After 4 week delay, that leaves 48 weeks remaining in the 2011/2012 tax year.
5100 invested 6th April 2010 @ 3.25%
Up to 5th April 2011, interest 3.25/100*5100*52/52 = 165.75
Total ISA now worth £5265.75
Up to 5th April 2012, interest 3.25/100*5265.75*48/52 = 157.97
Total ISA now worth £5423.72

I am going down the scenario 3 route.

glider3560

You have failed to compound the interest for provider A in Scenario 2.

Coventry (your example) pay interest on 31st May EVERY YEAR, including 2010. So interest is paid on 31st May 2010 then again on 31st May 2011.

7 weeks at 3.25% on £5100 = £22.31
Balance on 31st May 2010 £5122.31
52 weeks at 3.25% on £5122.31 = £166.48
Balance on 31st May 2011 £5288.79

Then transfer to Provider C as suggested for 3.25% from 1st June 2011.
41 weeks at 3.25% on £5288.79 = £135.53
Balance on 5th April 2012 = £5424.32

This is almost exactly the same interest as your Scenario 3 and proves that it doesn't matter when the account matures, you'll get the same interest.

RayWolfe

financequest wrote: »

ISA transfers typically take 4 weeks, during this time, interest may not be paid.

Where does this come from? They MAY take 4 weeks, but typically?
My personal experience for cash ISA transfers, for the three people whose finances I look after, is around 10 working days, two this year took less than a week and the longest ever was just under 4 weeks but I was credited on the date of the cheque ... so, absolutely no interest lost other than the opportunity cost of the higher interest on the new account had the old account closure been activated earlier.
That is not to say there are not disasters, but we mustn't allow the urban myth that all transfers are disasters, to grow on this site.

opinions4u

RayWolfe wrote: »

Where does this come from? They MAY take 4 weeks, but typically?
My personal experience for cash ISA transfers, for the three people whose finances I look after, is around 10 working days, two this year took less than a week and the longest ever was just under 4 weeks but I was credited on the date of the cheque ... so, absolutely no interest lost other than the opportunity cost of the higher interest on the new account had the old account closure been activated earlier.
That is not to say there are not disasters, but we mustn't allow the urban myth that all transfers are disasters, to grow on this site.

Careful.

You'll be suggesting ISA providers are actually quite good at operating within industry guidelines on transfers next!

Don't let the truth get in the way of a good rant man!

agsnu

financequest wrote: »

If you raise a question on the MSE forum that challenges possible sharp practice by any of the various financial institutions

50% of the posts challenging "sharp practices" tend to be by ill-informed spoiled brats who don't want to even consider the possibility that they should take some sort of responsibility for their own affairs. Unfortunately, apparently suggesting that these people should put some more effort into understanding the issues and taking control of their own actions, many very knowledgeable and objectively helpful forum members get accused of being plants from the evil financial services industry (which is entirely staffed by selfish bankers totally hell-bent on screwing everyone else out of their hard-earned cash).

Get a grip. The Coventry doesn't organise its funding programme around your whims and wants. Boo hoo. News flash: The world does not revolve around you.

The Coventry's offer is a market leading rate with clearly defined terms and conditions. The Coventry is not an investment bank with thousands of staff earning millions a year and has not been bailed out by the taxpayer.

You just can't please some people.

opinions4u

agsnu wrote: »

50% of the posts challenging "sharp practices" tend to be by ill-informed spoiled brats who don't want to even consider the possibility that they should take some sort of responsibility for their own affairs. Unfortunately, apparently suggesting that these people should put some more effort into understanding the issues and taking control of their own actions, many very knowledgeable and objectively helpful forum members get accused of being plants from the evil financial services industry (which is entirely staffed by selfish bankers totally hell-bent on screwing everyone else out of their hard-earned cash).

Get a grip. The Coventry doesn't organise its funding programme around your whims and wants. Boo hoo. News flash: The world does not revolve around you.

The Coventry's offer is a market leading rate with clearly defined terms and conditions. The Coventry is not an investment bank with thousands of staff earning millions a year and has not been bailed out by the taxpayer.

You just can't please some people.

:T Spot on.