Best time of year for good ISA interest rates

Renfro

This is probably a bit of a silly question, but are there certain times of the year when better ISA interest rates tend to be offered?

For example, do interest rates become less competitive in March as savers rush to make use of their allowance before the deadline? (so they'll accept pretty much anything because they're running out of time). Do rates tend to get better in April as companies compete among themselves to attract savers with their new allowances etc.?

I'm asking because I've just realised that I've not used this year's allowance and I'm wondering whether to just pick from the best rates that are available now or wait until after Christmas.

I saw that some 4.0% 2 years fixes were available a couple of weeks ago, but there's nothing as good as that available now, and I suspect that there's not much incentive to provide better rates to attract savers at this time of year seeing as most people are spending their cash on other things in the run up to Christmas.

I'd prefer to get it out of the way now, but if the new year tends to bring fresh competition on rates then I'll wait.

bigfreddiel

Usual time for the best rates is just before and after the new tax year i.e. March/April but its not guaranteed.

fj

MoneySavingUser

IIRC rates are good before and after the start of a new ISA year.

Before to attract those people who have not yet invested funds and after to attract those ready to invest their new allowance.

It may be possible to invest in one now and then transfer those funds to a better paying one later on. Assuming there are no penalties for transferring out and the new one allows transfers in.

I've actually been wondering about what to do next year - Halifax have always had good offers I hope they do the same this year.

Renfro

Thank you both.

I think I'll hold off for a couple of months and see what kinds of rates are being offered in the new year.

psychic_teabag

MoneySavingUser wrote: »

It may be possible to invest in one now and then transfer those funds to a better paying one later on. Assuming there are no penalties for transferring out and the new one allows transfers in.

Sometimes the best rates are for new money only, not for transfers. But it's probably only 0.1% or 0.2% or so - £1 per £1000 per year - and so it may still better to get the money into an ISA now, than keep it in a taxable account for 3 months.

eg £1000 at 3% (taxable) for 3 months is £7.50 but then you lose £1.50 tax.

So there may not be all that much in it. (Unless you're a higher-rate tax payer.)

If Halifax (or others) are still offering to pay interest from the time an ISA transfer request goes in, you'd get double interest for the time taken, which is an added bonus.

(I'm assuming an instant-access ISA now, possibly transferring to a fixed-term one in March.)

bigfreddiel

Renfro wrote: »

Thank you both.

I think I'll hold off for a couple of months and see what kinds of rates are being offered in the new year.

make sure that's the new tax year!

Renfro

bigfreddiel wrote: »

make sure that's the new tax year!

As I said in my opening post, I have not used any of this year's allowance, so I did mean that I would be checking rates again in the new calendar year (not tax year).

If I wait until the new tax year starts in April, then I will lose this year's allowance altogether.

alastair_h

Renfro wrote: »

As I said in my opening post, I have not used any of this year's allowance, so I did mean that I would be checking rates again in the new calendar year (not tax year).

If I wait until the new tax year starts in April, then I will lose this year's allowance altogether.

So you can save £5,340 for 2011/12 tax year (before 5th April 2012)

and a further £5,640 for 2012/13 tax year (from 6th April 2012).

bigfreddiel

of course for every month you wait for a better rate it you need +0.5% to make up for a months worth of lost interest

i.e. if you could get 3% and you decide to wait for something better then after 1 month you need 3.5% after 2 months you need 4% and so on to make up for the lost interest.

fj

Derivative

bigfreddiel wrote: »

of course for every month you wait for a better rate it you need +0.5% to make up for a months worth of lost interest

i.e. if you could get 3% and you decide to wait for something better then after 1 month you need 3.5% after 2 months you need 4% and so on to make up for the lost interest.

fj

Only if you had the money in a current account earning 0% in the interim.