ISA transfer A&L to NROCK

Indispensable_Hobbes

Hi I've got an ISA with A&L (currently 5.70% - 0.7% abv boe until 04/07) I've just noticed that Northern Rock have just issued a fixed rate of 5.50% for 1 or 4 years. Being staff i get a% bonus.
Is it worth transferring my balance to the NR one for a year do you think?

Cannon_Fodder

Is that A&Ls Direct ISA 2?

I'd happily be corrected, as I also have one, but as far as I can tell they've left the current Direct ISA 2 rate at 4.75%....see first link...so by adding the bonus 0.70% for the earlier account-holders, I (and I presume you) are getting 5.45%...shown a few sections down on the second link...rather than true BoE 5% plus 0.70%.

http://www.alliance-leicester.co.uk/savings/index.asp?page=current-rates&type=TaxFree

http://www.alliance-leicester.co.uk/savings/index.asp?page=closed-rates

If I'm right, for me the difference of 0.05% is worth 50p per thousand, per annum. Not really worth the paperwork. It depends on how good your staff % bonus is, how much that is worth to you.

If I'm wrong, can you post a link to confirmation of the full 5.70%, as several people on here are itching to hear that good news!!

For me, that would definitely make A&L a better deal - for you, it again depends on the % extra you get as staff.

However, personally, I would hesitate over going "Fixed" at this time, as it seems possible another rate rise will take place February. Maybe A&L will do the right thing that time...or others will take over at the top of the comparison tables.

YorkshireBoy

Firstly, your A&L ISA is not linked to the BOE base rate.

Secondly, it's currently paying 5.45% (for you) - 4.75% underlying, boosted to 5.45% by the addition of 0.7% bonus which is fixed until Apr-07.

Thirdly, if you want someone to crunch some numbers for you, you'll have to divulge what your NR bonus is - unless by "a%" you mean 1%?

Conor_3

jenyking wrote:

Hi I've got an ISA with A&L (currently 5.70% - 0.7% abv boe until 04/07) I've just noticed that Northern Rock have just issued a fixed rate of 5.50% for 1 or 4 years. Being staff i get a% bonus.
Is it worth transferring my balance to the NR one for a year do you think?

NS&I is currently at 5.55%.

Cannon_Fodder

re NS&I - but you cannot transfer previous ISAs into it....

Indispensable_Hobbes

argh dont bite me head off lol

my mistake the rate will be 4.75 + 0.7, just put my fingers into gear without thinking.

my balance is 5k+ and my bonus is 0.50% so theres 6% fixed for 1 or 4 years

Cannon_Fodder

£5000 x 0.55% (NRock 6 - A&L 5.45) = £27.50 extra per annum.

You lose a few days interest when they move it across...marginal for the 1 year version.

It doesn't seem to read as though you can add much, once the offer period is up...and there are 60 days loss of interest on the 1 year version, or 150 days loss of interest on the 4 year version, for withdrawls...

Maybe, if you know you will NEVER touch the funds under ANY circumstances it would be worth it.

Seems altogether too many rules and regs to run it, for my liking.

MarkyMarkD

You are all happily comparing a fixed rate with a variable rate, which isn't right.

You need to apply your estimate of what's going to happen to interest rates to the variable rate, before comparing it with the fixed rate.

If you think rates are likely to rise, locking into a fixed rate for 4 years to benefit by a relatively small amount is a bit daft.

If you think rates are likely to fall, then the fixed rates are far better, as well as being guaranteed.

Cannon_Fodder

MarkyMarkD - that's why I said in my first post :-

Cannon_Fodder wrote:

Is that A&Ls Direct ISA 2?

However, personally, I would hesitate over going "Fixed" at this time, as it seems possible another rate rise will take place February. Maybe A&L will do the right thing that time...or others will take over at the top of the comparison tables.

The OP, having a 0.5% bonus, may decide that the bonus will put her ahead of, or at worst level with, possible rates increases, at least for the 1 year deal.

Indispensable_Hobbes

in simple terms it isnt really worth transferring?

masonic

jenyking wrote:

in simple terms it isnt really worth transferring?

Well, assuming the transfer results in 5 days lost interest, it would take less than two months to break even with a rate difference of 0.55%. From that point onwards you would be better off than if you stayed with A&L, even if you find you need to switch again at some point in the future (which you would have to do anyway with A&L when their bonus ends).