First Direct past rate behaviour

Porcupine

I'm thinking of taking out a cash ISA with First Direct. What concerns me is that they don't do the usual naming thing of 'Super-Duper Extra Wealthflogger ISA issue 73', which means they close that to new business and open issue 74 to new business with a lower rate, but they just have a variable-rate 'cash ISA' with no bonus. This worries me that they're going to mess with my rate after I've signed up because all their customers are on the same ISA - they don't close it to new business, they just wind the rate down and screw the existing customers.

So anyone any experiences of whether this has happened in the past? The other thing they can do is mess with the rate thresholds which is sneakier - doesn't count as a rate cut for the best buy tables because you can still get top rate if you have £1m in your cash ISA, but then nobody does.

The alternative is staying put until ISA season, but I'm not sure there's going to be much joy this year...

Gromitt

They've dropped the rate in the past, but I don't see what the problem is, when the rate is dropped, move your ISA somewhere else which has a better rate. I moved mine to a 3 year fix 3.7%, and I'm glad I did, as the first year isn't up yet and look at the rates now.

Porcupine

I admit I haven't done it for a while, but last time I did a transfer they usually involved up to a month of limbo with cheques in the post, oops we lost your application, loss of interest etc etc. Which is not worth risking for 0.25% for 2 months. Have things improved?

badger09

Porcupine wrote: »

I admit I haven't done it for a while, but last time I did a transfer they usually involved up to a month of limbo with cheques in the post, oops we lost your application, loss of interest etc etc. Which is not worth risking for 0.25% for 2 months. Have things improved?

The ISA transfer process has speeded up since BBA introduced new guidelines in 2011.

http://www.thisismoney.co.uk/money/saving/article-2114971/Nine-ISAs-moved-15-day-limit--experts-say-banks-MUCH-better.html

Many posters reported transfers taking less than 5 working days, and several providers pay interest from receipt of transfer application.

Porcupine

I found a page giving the previous rates for the FD Cash ISA:
http://www2.firstdirect.com/1/2/rates-and-charges/rates/Savings-accounts

Cash ISA
Effective from 2 March 2009 to 31 January 2012*

Accounts opened online from 1 September 2011 to 31 January 2012, fixed until 31 January 2013 and then reverting to the variable rate applicable at the time.
2.70%

Variable Cash ISA rate
0.20%

The star isn't explained.

So they're doing the sneaky naming thing but without renaming the account. Argh. But basically it means the ISA was in 'can't be bothered' mode for old signups, but new signups got a fixed rate.

So unclear how long the existing rate will last. However the BBA guidelines say the new provider 'will' ensure there's no gap in interest so there's less risk here.