Leek 5 year ISA 4.25%?

plarka

This is currently the ISA with the highest interest rate, but it's by post only. I've never done a post only account before, but this rate is so good I think I'm willing! But I can't find an address to send the application to, would it be the regular address I need to use a stamp for? And somewhere on the site it seems to say you get stationary to use, and freepost address or something? Do they send you that all once you get the account, so you initially pay a stamp to get the account but after that it's freepost?

Speculator

Are you sure it's 4.5%? I can only find 4.25% on their website.

The address to send your form to is here. 50 St Edward street.

http://www.leekunited.co.uk/media/documents/Leek_By_Post_Leaflet.pdf

plarka

Oh gosh, sorry, I meant 4.25%! I'll try and change it on my post!

innovate

Also no transfers in allowed

plarka

I don't mind about transfers, just wonder about how to send them my money by post, will it cost me a stamp or be freepost?

innovate

You send them a cheque, I presume, in an envelope with a stamp on - - or you use Faster Payments to electronically pay your money in.

MoneySaverLog

innovate wrote: »

Also no transfers in allowed

Birmingham Midshires 5 year ISA is 4.05% and allows transfers in, come close to the 4.25% offered here.

Wait until April and see what rates come out then perhaps

Gordon_the_Moron

Both accounts are postal operated, BM has a slight advantage in that you can open it online, but afterwards its postal only (if you want to view your account online you can get 4% for a year with Halifax, though I wouldn't give up interest for that personally, also with Halifax you can't make early withdrawals, you have to close the account and take all the money out)

The advantages of the Leek account are it pays nearly 5% more interest than the BM account and it charges 120 days interest for early withdrawals, compared to the BM account charging a whopping 365 days. The only downside is you can't make transfers in.

Personally wouldn't touch the BM account at the moment, the penalty for early withdrawal is FAR too high, you are likely to be locked in at an uncompetitive rate in the future with a huge penalty for taking money out. I'd go for a shorter fix or instant access and see what is available in the future. 3.6% for a 2 year fix or 4.05% for a 5 year fix, I wouldn't take the risk myself. On the other hand the Leek account for this year's money isn't such a bad gamble imho.

If you put £5640 (the maximum the Leek account will take) into each account here is what you'll have each year for a comparison.

BM account
After 1 year £5868.42 (£5630.75 if you close)
After 2 years £6106.09 (£5858.79 if you close)
After 3 years £6353.39 (£6096.08 if you close)
After 4 years £6610.70 (£6342.97 if you close)
After 5 years £6878.43

Leek account
After 1 year £5879.70 (£5797.55 if you close)
After 2 years £6129.59 (£6043.94 if you close)
After 3 years £6390.09 (£6300.81 if you close)
After 4 years £6661.67 (£6568.59 if you close)
After 5 years £6994.79

NOTE: I've not looked at the terms and conditions of these accounts, I've assumed that
1. The withdrawal penalty is taken from your capital if the interest owed doesn't cover it, this might not be the case so close the BM account after a year and you might get £5640 back.
2. The withdrawal penalty is charged on the amount you have in account at the time of the withdrawal not the amount initially deposited. Hence why you would get less than you deposited back if you closed the BM account after 365 days, you earn 365 days interest on your deposit, then pay a penalty of 365 days interest on your deposit + interest.
3. If you opt to have interest paid to a separate account, (you will lose the advantage of the interest being ISA protected if you do that) it will slightly reduce the withdrawal penalty as the balance of the account will be lower. Not all accounts will allow you to do this, again I've not checked if these two do.