05/06 tax year - cash ISA - 5.50%+

Milarky

From ED's comprehensive post - 7 back:

Portman Bdg Soc Regular Saver ISA @ 7.50% Fixed rate - key features :
- only available at branches of Portman or The Staffordshire
- must make 12 monthly deposits of precisely £250
- if balance falls below £250, interest rate will be fixed at 0.10%
- withdrawals incur 90 days' loss of interest
- £30 fee for transferring to another ISA provider

Has anyone else noticed what the £30 exit fee actually equates to here? It is 1% of the total [maximum] investment of £3,000. But The most interest you can expect from this account anyway is 4% or thereabouts - because it is a regular savings account with an average annual balance of half the annual amount saved. Unless they allowed you to transfer from the follow-up account without a fee of £30 also [and it looks like they charge a fee for transfers out from all their ISAs] then the effective rate of interest is only about 3/4ths or 75% [i.e. the 4% it is possible to earn less the 1% fee] -which is about 5.75% - and that on an average balance of £1500.

I feel like complaining to the Portman about the tactic this exposes because anyone can offer high 'headline' interest rates like these if they simply whack on a fee to claw back a great chunk of it.

I dunno - what do others think about this?

deemy2004

the real rate of return is approx 6.2% and not 4%

Your forgetting the interest on the feeder account, at say 4.9% (Halifax web saver)

Yeh, I agree the £30 charge is dispicable, which cuts the rerturn down to just 5.2%, not really worth the effort is it ?

Speculator

I assume you can withdraw from or close your Easy Access ISA without penalty after the aniversary?

lipidicman

Withdraw or close, yes. Transfer, no - these all attract the transfer fee as far as I know. But who closes an ISA? it is the first place you save, and the last account you withdraw money from!

The fee is NOT retrospective however. If you opened an ISA last april you can transfer it 'fee-free' I'm not sure when the fee was introduced, I think it was the new year (January, not april!)

ED

Interesting debate...

Quick note to pass on news just in from Lambeth Bdg Soc :

"the Mini Cash Postal ISA is no longer open as a new Issue. However, existing customers are able to invest their new tax allowance in the issue that is already open."

BigDunc

Can anyone tell me if I am allowed to open an ISA for the 2005-2006 tax year with a different provider to my current ISA?

jimclark1967

BigDunc wrote:

Can anyone tell me if I am allowed to open an ISA for the 2005-2006 tax year with a different provider to my current ISA?

Yes, you can open with any provider you wish

:j

steady__eddie

I have opened an I.S.A. every year since they were introduced and each one was with a different provider. Now, where did I put my carpet bag ?

Speculator

From moneyextra.....

B&B hits the ISA trail again

Bradford & Bingley is hitting the ISA trail again with the launch of two new plans. First up is the ISA Regular Saver offering 6% gross (6.05% AER) for the first year for customers making monthly contributions; then repo rate +0.50% for the second year. The latter works out to 5.25% at current rates.

Minimum regular monthly contribution is £10, maximum £250. Deposits can be made by standing order or 'over the counter' payments in any Bradford & Bingley branch. Interest is paid annually on the anniversary of the plan.

For lump sum investors, on the other hand, the new Fixed ISA 3 will be offering a guaranteed 5.25% gross/AER for the next three tax years.

Customers can open an account with a lump sum of £9,000; £3,000 going immediately into the ISA the remaining £6,000 held in a feeder account. For each of the next two tax years £3,000 is automatically subscribed into the ISA. The 5.25% guarantee will apply to both the feeder account and the ISA.

Worth pointing out however is that while the interest rate within the ISA is tax-free interest on the balance in the feeder account will be subject to tax.


05.04.05

ED

new contender for Mini Cash ISA - £3,000 lump sum :

Tipton & Coseley Bdg Soc Premier ISA (launch date: 6th April 2005) - key features :

- 5.50% interest (variable) including 0.35% bonus for first 6 months
- £3,000 opening balance required
- 30 days withdrawal notice (minimum withdrawal £500)
- all transactions are via post

http://www.tipton-coseley.co.uk/home/savings/premier-isa

(This bdg soc is based in the West Midlands.)