whats this all about ?????????

trademark

the wife has just bought a new car

after part xchanges she needed £7k

bank of scot gave her 6.1% total interest over 4 years £886 (approx)

we dont need the loan as we have the 7k but we decided to put the 7k (£6k of it) in two barclays isa's

6.50% interest ..... for the first year ....yes , but we can still switch it and rates may be higher then

the way i work this out is that we will earn more than £886 over 4 years with the isa

is this right , and if it is why arnt people taking loans and earning more in interest with banks offering isa rates?

or are my calcs all wrong ?

CLAPTON

it works for you so use it and make a little extra money.
but for anyone without the 7K it wouldn't work and with anyone with 7k plus the ISA already it wouldn't work.

exel1966

In theory a good idea if you can get the loan at a decent rate, but what if you need to take out an additional loan/credit within those 4 years. It may work againt you already having a loan, especially for such a small return with a difference of only 0.40% at todays rates.
Obviously BOE rates will change in that period, but that doesn't mean to say Barclays have to increase their rates, they could even decrease them plus with the effects of inflation you may well lose out in the long run.

mleonard79

why arnt people taking loans and earning more in interest with banks offering isa rates?

Hi Trademark,

What you're talking about people doing here is in effect stoozing and since this can be done in a much simpler way and for a much bigger gain with 0% credit cards (albeit taking into account the BT fees that are now commonplace) it doesn't make sense for people with a good credit rating who want to stooze and can use their credit rating to get decent limits with credit cards to apply for loans instead.

Also as Clapton says if a person has already used their ISA then taking a loan like this will cost them more than they can gain in interest elsewhere due to tax so it would be pointless doing it. You've also got to take into account that if you can't pay back the loan without taking money out of the ISAs to do so then when you take money out of the ISAs you will be losing that allowance for good.

Regards

Michelle