M&S 3yr fixed rate savings

funkey_monkey

I've got £35k for this years ISA allocation. Currently I am using M&S cash ISA which is dropping to 1.5%.

Not really sure where to move, but I am thinking of placing it into their 3yr fixed rate ISA @ 3.25%. There is a fixed £100 penalty to withdraw and withdrawals can be made to other providers.

I am thinking that even though there is talk of IR rising that after 1yr the 3yr option will provide more interest on 3.25% than anything else at the minute and the additional interest money will more than offset the penalty should I decide to transfer out before maturity.

If rates rise quicker than expected in other ISA's then I'll just tx out and take the risk of being slightly down in interest.

Does this sound like a reasonable plan bearing in mind the amount I have in the ISA?

My plan does rely on rates not rising quickly over the next 12 months and I really don't think that will happen IMO.


Thanks,

G.

missile

Nationwide (and others) offer a better fixed rate for 3 year cash ISA.

10_66

funkey_monkey wrote: »

...but I am thinking of placing it into their 3yr fixed rate ISA @ 3.25%. There is a fixed £100 penalty to withdraw and withdrawals can be made to other providers...

This is what a lot of us did when M&S were offering 4% back in April (because of the gain that would be made by the extra interest, offset against the £100 penalty if needed), but as mentioned in post #2, with N'wide offering 4% for their 3 year fixed, only you can decide whether it's worth losing the extra interest you could be making with N'wide for the possible advantage of being able to move from 3.25% M&S if rates do go up.

Mickygg

3.25 fixed for 3 years is a poor rate, but then transfering out is hassle. I would go for the 4% option.

funkey_monkey

Problem with the Nationwide ISA is that you lose 270 days interest for an early withdrawal. I'm not expecting rates in ISA's to be this low for a long time 1.5yrs + so losing almost 1yrs interest is not something that appeals.

missile

Not a problem if you do not withdraw. You know your circumstances, it's your money and your choice.

juicyjude

If you go for the Nationwide option in my experience they took 3 months to transfer my ISA over into a FRISA and I lost at least 6/7 weeks interest! You may be lucky though this was at the height of the ISA transfer time!

missrlr

nationwide (formerly Portman) account took 4 months to transfer to M&S fixed rate bonus product, and I ended with a goodwill gesture of £50 because of thier utter and complete incompetence. Rates I think can be better elsewhere, but M&S seem fine if you don't need the money access anytime soon.