Isa help

alanewing1

Hello,

I currently bank with santander. I have a bank account and a worthless 'easy isa'.

In my ISA I have just over 11.5k saved which managed to make me £8 richer last year, just having a look through these forums people dont seem to recommend Santander? I thought they were a reputable bank?

One thing though is as I live in Northern Ireland I dont have access to most of the mainland banks. My town has a first trust, bank of ireland, northern bank, ulster bank and a santander.

Can anyone give me some options as to what I should do?

Thanks.

kidmugsy

Postal or internet.

alanewing1

Im assuming thats how you manage your ISA? I prefer internet I guess.

opinions4u

Halifax ISA Direct Reward (3%) seems to be popular for transfers in at the moment.

They do have branches in many larger towns in Northern Ireland (as well as a large call centre in Belfast) and the account is easily accesible online and works well if you have another Halifax account such as Web Saver Reward or the Reward Current Account.

alanewing1

Thanks, Ill take a look.

OneADay

Get an online account with Halifax say - they offer 3.0% variable + 0.2% if you have a current account with them.

I just closed my Santander isa after nearly 12 months - it was 3.5% for 12 months and had I not got the letter from them in the 11th month and had I not done some quick research, the money in the isa would have been paying 0.5% after the 12 month period. Yet if you open a new isa account for the new financial year, then they will pay 3.3%.

There must be a large or worthwhile number of customers who do not move their money because they do not realise the t&c and the rate drops. FSA etc should clamp down on this.

I gave Santander the boot - they can keep their 3.3% new isa - I do not care. I closed my second account with them too (an online saver).

spikyone

OneADay wrote: »

Get an online account with Halifax say - they offer 3.0% variable + 0.2% if you have a current account with them.

I just closed my Santander isa after nearly 12 months - it was 3.5% for 12 months and had I not got the letter from them in the 11th month and had I not done some quick research, the money in the isa would have been paying 0.5% after the 12 month period. Yet if you open a new isa account for the new financial year, then they will pay 3.3%.

There must be a large or worthwhile number of customers who do not move their money because they do not realise the t&c and the rate drops. FSA etc should clamp down on this.

I gave Santander the boot - they can keep their 3.3% new isa - I do not care. I closed my second account with them too (an online saver).

That's an incredibly rash and rather silly thing to do. It's not just Santander; virtually every bank offers good rates that only last a year on their highest-rate products. In fact, the Halifax account that you recommend does just that so it seems that for the second time, you've taken out an account without knowing it's Ts & Cs.

I have zero sympathy for customers who lose out because they don't know their account's terms and conditions. You should always research what account you're taking out to get the right deal. You wouldn't buy a physical product without knowing what it does/doesn't do!

If you open an account online, there will be a link somewhere obvious to its terms and conditions - and there's also usually a separate statement that mentions whether the rate is fixed or variable, and for how long any introductory offer applies. And if you open in a branch you're even more foolish not to read the terms and conditions that they must give you!

Not to mention of course, that the advertised interest rate on instant access accounts are almost always stated as "x% AER variable". Ignore that last word at your peril.

spikyone

alanewing1 wrote: »

just having a look through these forums people dont seem to recommend Santander? I thought they were a reputable bank?

There are a few stories doing the rounds where they've made schoolboy mistakes that have taken a looong time to sort out. I've never had a problem, although I would certainly rank Halifax's service as better in most areas.

Santander currently offer a 2-year fixed rate ISA at 3.7% that does allow transfers, although the downside is that interest rate rises are likely to wipe out most of that within the next 2 years, and you'll lose interest if you need your money (in fact you have to close it to get at your cash). You might just beat the Halifax account with it, but on balance I don't think it's worthwhile.
I'd suggest opening the Halifax account and getting them to transfer your "old" money into that, and then opening one of the new Flexible ISAs (or the Loyalty ISA if you qualify) for this year's allowance.

OneADay

spikyone wrote: »

That's an incredibly rash and rather silly thing to do. It's not just Santander; virtually every bank offers good rates that only last a year on their highest-rate products. In fact, the Halifax account that you recommend does just that so it seems that for the second time, you've taken out an account without knowing it's Ts & Cs.

I have zero sympathy for customers who lose out because they don't know their account's terms and conditions. You should always research what account you're taking out to get the right deal. You wouldn't buy a physical product without knowing what it does/doesn't do!

If you open an account online, there will be a link somewhere obvious to its terms and conditions - and there's also usually a separate statement that mentions whether the rate is fixed or variable, and for how long any introductory offer applies. And if you open in a branch you're even more foolish not to read the terms and conditions that they must give you!

Not to mention of course, that the advertised interest rate on instant access accounts are almost always stated as "x% AER variable". Ignore that last word at your peril.

Maybe but Santander are consistent in this policy and I am fed up with it. Invest 5k first year and that 5k gets the 3.5% say - come the next year they drop it to 0.5% and at the same time advertise a new isa for new funds only at 3.3%. That practice bothers me.

I had only one option and to move last years allowance (not something I wanted to be wasting time but I was forced into doing that). There were few options to stick that money away and best for me was halifax at 3.2%. But I have not invested a penny for current year and do not intend to till I see some improvement in rates.

alanewing1

Thanks for the help so far. :T

Is ISA the best way forward however, would investing be worth while?

Stochasticity

OneADay wrote: »

Maybe but Santander are consistent in this policy and I am fed up with it. Invest 5k first year and that 5k gets the 3.5% say - come the next year they drop it to 0.5% and at the same time advertise a new isa for new funds only at 3.3%. That practice bothers me.

Why? Every single bank does it, not just Santander. Barclays, HSBC, Halifax, Lloyds, First Direct, Natwest, RBS, you name them, they do it. And the reason is simple.

Take a simplified example.

The banks wants to borrow from depositors at 1.75%, say.

It can either offer everyone 1.75%.

Or it can offer half of its customers a market-leading 3.4% and the other half 0.1%.

The truth is that very few new customers are going to subscribe at 1.75%. It's just not a good enough rate, it won't feature on the best buy tables, it's hard to promote, it's likely they won't raise much in the way of new funds.

Meanwhile, very few existing customers are going to be retained by this single rate that wouldn't have been retained by a much lower rate because the biggest reason people stay with their banks is inertia. It takes a bit of effort to keep yourself aware of what rates are out there, it takes a bit of effort to open a new account, it takes a bit of effort to transfer the funds across. Many who don't understand compound interest perceive the extra interest available to be no more than 'a couple of pounds', and those efforts don't get made.

Lots of new customers, on the other hand, will subscribe if the bank offers a market-leading rate for a short period. It'll feature on the best buy tables, it's easy to promote, it'll get the bank amongst the headlines for the right reasons. The banks will raise a lot of money from new customers and is likely to increase its market share in the process.

Once the banks have these customers, they can bank on the same inertia allowing them to get away with paying many of their existing customers next to nothing. Those who get paid next to nothing cross-subsidise those who chase the market-leading rates.

The end result of it all is that the banks that offer some good rates and pay for them from the terrible rates they give others will raise a lot more deposits at 1.75% overall than a bank that just offers 1.75% to everyone. For the sake of their competitiveness, the banks can't afford to A) lose market share or pay a higher overall rate to raise deposits.

This works in your favour too, if you're a clever customer who puts in a little effort. After all, you'd rather receive 3.4% on your savings than 1.75%. You can move your money every 12 months from one account with one bank offering a market-leading rate to another and always get far better rates than if the banks offered one rate to all of their customers.

Those who put in the effort benefit from those who don't. The choice is simple: put in a bit of effort and be subsidised by those who don't, or don't put in the effort and subsidise those who do. It's your money and your choice.