Halifax ISA Direct Reward extra .2% question

DragonQ

Does the extra 0.2% get added to your normal ISA interest? If so, what happens if Halifax muck up the interest calculations and you've already initiated a transfer to another ISA? Presumably they can't then correct their mistake on the ISA account itself so they'd have to pay it to you another way, which means you'll lose the tax-free allowance on that extra 0.2%.

10_66

tipsychick wrote: »

I may well be mistaken 10_66 but I thought the account still needed to be left open with a minimal balance of £1 to qualify for the extra 0.2%. Then when that's paid out next April, along with the annual 3% interest, you can transfer out both interest payments plus the £1 too and close the account.

You can, however, transfer out the bulk of your capital (save the £1!) whenever you like, so next March on the anniversary of account opening when the rate drops is fine. For the last couple of years the Halifax has offered a replacement for those coming off the bonus, so people haven't had to transfer away and have just updated from Rewards 3 to 4 or whatever.

If my experience in the past and today is anything to go by, I predict there will be lots of problems reconciling the two interest payments next April. Their call centres better start bracing themselves!

Halifax know how to complicate things don't they? The problem with having to keep it open with the £1 to get the interest is that if I transferred all but a £1 out to a fixed rate account in March 2012, come April 2012 I'd be left with the £1 plus the interest in Halifax and not be able to add it to the fixed rate I might have transferred the rest in to in the March. Otherwise, if the full balance was left in until April 2012 according to the t&cs the interest rate drops to that of the ISA Saver Direct after 12 months, which is currently only 1%. These complications were why I decided not to add this year's subscription to it and took out a Barclays Golden ISA at 3.25% instead.

On their website the summary page for the Direct ISA Reward issue 4 said that the "interest is paid on 5 April and at the end of the Reward period". As the end of my reward period is March 2012, I was optimistically hoping that this meant the bonus would be paid in March 2012, and as the 12 months had expired I'd then be free to transfer out and get the basic 3% interest added on closure and transfer.

Edit: On reflection, I didn't register for the extra 0.20%, because, at the time (I remember there was a discusssion about this on one the threads, but can't remember which one), I don't think you needed to when I opened mine. I vaguely remember it being something to do with whether or not you already automatically qualified for the bonus due to when you opened the ISA and had an existing Reward Current Account. I, therefore, didn't get a letter as mentioned by rb10 in post #6..........

2010

The extra .2% on £5k works out at £10 tax free, £8 after tax.

If there are problems with the .2% being paid, and knowing Halifax there will be, people should formally complain and then vote with their feet.

tipsychick

Hi again 10_66

My original impression was exactly the same as yours. I was expecting the 0.2% Rewards interest to be paid the year later, in Sept 2011 and again in Feb 2012. I thought I would then be able to transfer away in March 2012 when my 3% rate drops, with the 3% interest paid on account closure, and no reason to wait for April 2012.

However, I can remember reading someone knowledgeable on here (probably rb10!), who said that the Rewards interest wouldn't be paid out until the April statement after the Reward period ended. Now I think about it, that was always going to be the April 2012 statement, wasn't it?

You're also right about not having to register for the extra 0.2% interest if you'd opened your ISA account before a certain date. This was the subject of its own set of confusion at the time, I remember not why, and so I telephoned just to make sure. I've had the account in one incarnation or another since March 2009, so did automatically qualify. Not sure if you specifically had to opt-in in Feb 2011 irrespective of original account opening date or not, think you might have had to do so this time round. Again, ever obedient, I phoned just to be certain.

I will try and dig out the t&cs for all the ISA Rewards, 1 through 4, plus the two sets of t&cs regarding the 0.2% bonus interest that I was sent in Sept 2010 and Feb 2011. I think they did change the wording at some point. Depending what the t&cs actually say, it might be necessary to write and seek clarification. I'd definitely prefer it paid out as you and I originally interpreted.

I can certainly see the dilemma as far as FRISAs are concerned but can't immediately see a way round it. As I said above, I think the Halifax and its customers are going to have trouble reconciling these two separate interest payments - or will they be rolled into one for super-added confusion? IME it will be a lengthy process transferring-out at the busiest time in the ISA calendar if you're having to wait for them to sort it out. To give you some idea, I still have a formal complaint outstanding from April 2011 on one of ours!

tipsychick

DragonQ wrote: »

Does the extra 0.2% get added to your normal ISA interest? If so, what happens if Halifax muck up the interest calculations and you've already initiated a transfer to another ISA? Presumably they can't then correct their mistake on the ISA account itself so they'd have to pay it to you another way, which means you'll lose the tax-free allowance on that extra 0.2%.

I think the 0.2% interest will be added in April 2012. Whether it is added separately from the 3% or not remains to be seen. From the letter I've just had specifying the precise amount of 0.2% interest I'll receive, I imagine it might be a separate credit though.

If they muck it up, I think it will prove nigh on impossible for the correct interest to be added to an ISA that has already been transferred away to a new provider. If you are in that situation and you've already transferred away, presumably they'll compensate you outside the ISA for their error but you will have lost the tax free status on that, albeit small, part of the interest.

I don't wish to denigrate Halifax's systems but our previous experience means I can't help but be apprehensive.

10_66

Hi tipsychick

Thanks for your reply. It looks like it'll be April 2012 then, going on the fact you haven't had your bonus added for September 2011. I knew I shouldn't have opened this! Yesterday I sent a letter asking for clarification, if I get a reply I'll post the response here. I considerred very carefully about sending them a letter because I've got 3 sole and 1 joint Reward Current Accounts, and I know one or two people on the forum have said when they've contacted Halifax with a query, they've twigged the excess Reward Accounts and closed them. OH has 2 sole, so between us we make £30 a month, so fingers crossed they leave them alone.

Eponym

I got a letter from Halifax yesterday saying that my extra 0.2% interest on my 'qualifying variable rate savings account(s)' will be paid on my 'next usual interest payment date'. They didn't specify which account (I have the Reward ISA 4 and the Web Saver Reward) so I had to check it from the account number and sort code provided.

I am a bit confused though. I initally opened the Reward ISA 3 this time last year but due to major !!!!-ups from C&G, who were transferring the funds, the account wasn't actually funded until the end of December last year. Then I transferred over the the Reward ISA 4 (the 3.2% rate) when that came out earlier this year.

Halifax seem to be going by the date I first opened my initial ISA with them, which is good in a way but does confuse me a bit! I am now not sure if my 12 month period for the ISA is truly up or if they've made an error! If the reward period is up, does that mean the rate now drops to 1%?

DragonQ

Hmm, I've had a Reward Current Account for nearly 2 months and haven't received any letters about the 0.2% interest yet. Guess I'd better call them.

2010

I opened my ISA with Halifax on 30th April this year.
On the anniversary this will have to be transferred to another ISA because the rate drops to (I think) 1%.
This year, people in a similar position transferred their`s to a higher rate one with the Halifax.
They were able to do it online through a link on the Halifax site.

Bearing in mind it matures next April 30th, when do you think the .2% bonus would be paid and to which account?

10_66

2010 wrote: »

I opened my ISA with Halifax on 30th April this year.
On the anniversary this will have to be transferred to another ISA because the rate drops to (I think) 1%.
This year, people in a similar position transferred their`s to a higher rate one with the Halifax.
They were able to do it online through a link on the Halifax site.

Bearing in mind it matures next April 30th, when do you think the .2% bonus would be paid and to which account?

Don't know whether this helps or not, but from a screen print I took in March 2011, Halifax state that "interest is paid on the 5 April and at the end of the Reward period. For Halifax ISA Direct Rewards funded after 6 April, interest will be paid at the end of the Reward period. If you then keep your account as an ISA Saver Direct interest will be paid on the 5 April each year, or the previous working day if the 5 April is a non working day".