A&L ISA 5.4%, beware hidden charge

bugsonic

Martin's tips this week included an online ISA from Alliance and Leicester paying a generous 5.4% variable.

I checked out the details to see if it may be worth doing myself.

However, there's one thing I'm not very happy with. As it's a variable ISA if the rate drops, you'd want to move your money to a better paying ISA. that's fine Alliance and Leicester allow you to, but they'll charge you £25 for the priviledge! The second charge from the bottom of the page on the link below.

http://www.alliance-leicester.co.uk/savings/onlinesavertariff2.pdf

The Abbey postal ISA at 5.35% seems a fairer deal

oscarhugo

I agree with you, bugsonic, and wouldn't touch the A+L ISA with a barge pole because of that. AND you really have to hunt to find anything at all about the 25 quid charge (it doesn't mention it - not even in the small print - in their newspapers ads.) I'm quite surprised that MSE Martin would recommend this a/c, taking this into consideration.

deemy2004

£25 equates to 0.83% on £3k hence their real rate should be quoted as 4.57% ....

blinko

i agree its better to go with abbey and lose out on 0.05% which would equal £1.50 on 3k and have the freedom to move etc without having to pay a £25 fine !!!

Shinds

nice spot!

t_i_g_e_rr

I posted this somewhere else, but it seems to fit better here:

The interest rate for the Abbey ISA is 5.35%. The interest rate for the A+L ISA is 5.4%, but has a £25 transfer charge where the Abbey ISA doesn't. If I assume that I will need to transfer my ISA after 12 months to the new best player (a good money saving principle), I have calculated that the extra 0.05% is not worth it!

To cover the £25 transfer charge I would have to have £50,000 in my ISA (50,000 * 0.0005 = 25). If you began your ISA in 1999 and paid £3000 a year in at 5% interest each year, you would have less than £25,000 in your ISA this April; not even close.

Therefore, if my assumptions/calculations are correct, I should go with the Abbey ISA (if anyone can see a mistake, please let me know).

mariner2000

Yeah it's alright thinking that but from 6th April the Government removes it's cat standard from all ISA's therefore ALL ISA providers will review there position on charging and MANY of the bigger banks are expected to follow.

To be honest with you, who can blame them.

Why the hell should they transfer your ISA backwards and forwards free of charge whilst all the the customers are showing zero loyalty and chsing rates here there and everywhere.

If they didn't charge they'd pay less interest!!!

Stay british!

isasmurf

How many times do I have to say this?

C.A.T. STANDARDS ARE BEING REPLACED BY STAKEHOLDER TERMS.

http://forums.moneysavingexpert.com/showthread.html?p=416487#post416487

MarkyMarkD

And both CAT standards and Stakeholder terms are voluntary unless I'm mistaken, so the banks/building societies can continue to ignore tham as they have (mainly) done with CAT standards.