Why are ISA rates so low?

richgirl

The tax is paid to the government so the gross ISA rates should be similar to none ISA accounts.

Maybe they will catch up in the lead upto the new tax year ?

LizEstelle

Not sure I understand much of all that but thanks anyway.

All I know is that the normal rules of competition SEEM to be taking a quiet nap here...

zag2me

Bank of England raised rates, got a letter from Halifax 10 days latter saying they raised rates too. I can't complain about that

Cypher

Those that own houses that have doubled or tripled due to house price inflation

Thats just false (as I think you were implying), unless your downsizing or have surplus properties your house is never worth as much as the one your going to buy. 10 years ago I was stuck between buying this house and another one, the difference was £30k I decided I couldn't afford it at the time so we went with the cheaper of the two. 10 years on we have now outgrown this house and would love to buy the one we couldn't afford 10 years ago. Trouble is the difference between them is now around £100k, sadly during that time my wages have hardly moved by comparison so I'm in even less of a position to buy that bigger house. Yes my house is worth 3 times now what I paid for it big deal it won't do me any good. Even worse I have three children, how the hell will they ever be able to afford their own place.

For me House Price Inflation isn't doing the country any good and big mortgage payments and sky high taxes and fuel costs don't make me feel well off. Even worse is this stupid country that at ever turn try to come up with ways of getting even more money out of us.

Yes we've never had it so good :rolleyes:

thor

I think that the constant chipping away at saving rates in general has allowed the banks & building societies to get away with such crappy fixed isa rates. For the last few years we have become conditioned to expect all of the following:-
when boe rates
1. Rise - We get a smaller rise or no rise many days later
2. Stay the same - We still get rate cuts
3. Drop - we get a larger cut as soonas is humanely possible.

And just like energy suppliers, they are all at it so we can't 'shop around for better rates' like the financial advisers are always advising us to do on tv.
OK so ING came around a few years ago and intorduced a lift for a while but look at them now. We are lucky that we are still matching the base rates with them.

LizEstelle

What I truly do not understand is why there should be this clear lack of genuine competition.

Am I being obtuse or is there anyone else who thinks, as I do, that there is some kind of clandestine cartel in operation here, designed to maintain savings rates at an artificially low level?

It costs a fortune to equip, staff and run an across-the-counter financial operation. In these days of the internet, you'd think that some online entrepreneur could offer a better ISA rate than the high street banks and societies.

WHY isn't this happening? Perhaps I'm a cynic but it wouldn't surprise me to learn that there's a conspiracy going on here.

RayWolfe

LizEstelle wrote:

What I truly do not understand is why there should be this clear lack of genuine competition.

WHY isn't this happening? Perhaps I'm a cynic but it wouldn't surprise me to learn that there's a conspiracy going on here.

Oh dear!
I have just looked up Monyfacts website for ISA rates and observe the rates for cash ISAs range from 3.65% Ecology BS to 5.35% Newcastle BS!

LACK OF COMPETITION? CONSPIRACY?

Do you want to think again?
Ray

ManAtHome

thor wrote:

3. Drop - we get a larger cut as soon as is humanely possible.

Surely one too many words in that point...?

LizEstelle

RayWolfe wrote:

Oh dear!
I have just looked up Monyfacts website for ISA rates and observe the rates for cash ISAs range from 3.65% Ecology BS to 5.35% Newcastle BS!

LACK OF COMPETITION? CONSPIRACY?

Do you want to think again?
Ray

My point is that 3.65% is in the outrageously low category, whereas 5.35% is merely in the hopelessly low!

See my OP. If a one-horse outfit like Ruffler can do it, why can't (or, more likely, WON'T) others match or even better them? Yes, conspiracy... if only in the sense that they are all involved in a collective shuffling/dragging of feet and pocketing the difference themselves.

RayWolfe

LizEstelle wrote:

My point is that 3.65% is in the outrageously low category, whereas 5.35% is merely in the hopelessly low!

See my OP. If a one-horse outfit like Ruffler can do it, why can't (or, more likely, WON'T) others match or even better them? Yes, conspiracy... if only in the sense that they are all involved in a collective shuffling/dragging of feet and pocketing the difference themselves.

It's called a Market.
If Ruffler is so great then all the money in the world will go to them and everyone else will go out of business.
That doesn't happen.
And in instant access savings accounts the Market probably runs from 0.25% to 6.00%. Is that a conspiracy too? How many others approach Ruffler's rates for an identical product? Must my local shop sell milk for the same price as Tesco?
It's funny that people want to make as much profit from their money as possible but financial institutions are conspiring if they do.
This site helps us all to get better deals ... if we chose to use them. I guess by passing on good rate info we are conspiring.
Ray