T D Waterhouse & others cheating us on Interest Rates on self select PEPs and ISAs

JM_2

Hi,


T D Waterhouse cheating us by paying only 1/2% per annum interest rate on uninvested cash in self select PEPs and ISAs.

Unfortunately, quite a lot of other brokers are fleecing the investors in the same way.



If I am not keen on shares at any time, I don't see why the stockbroker should take massive chunk of the interest on my uninvested cash, and leave me with some bread crumbs. In this case 1/2% per annum.

This is robbery.

Gordon Brown has already watered down the advantages of having these type of saving accounts.

I would like to know which online stockbroker is fair and pays the market rate of interest on uninvested cash.

Please let me know.

Thanks

JM_2

cheerfulcat

PEPs and self-select ISAs are meant for investment, not saving. If you're not happy with the interest rate, buy medium dated gilts.

JM_2

cheerfulcat wrote: »

PEPs and self-select ISAs are meant for investment, not saving. If you're not happy with the interest rate, buy medium dated gilts.

If interest rates go up, then I may make a loss on the subsequent sale of the gilts.



I am really looking for a better firm of stockbroker.

Is anyone here getting a better deal ?

Thanks

JM_2

King_Weasel

I'm not sure cheerfulcat has appreciated your point, jm-2. The Stock Market did a bit of wobbling a few weeks ago. If you didn't see it coming you needed to have cash deposited with your stockbroker to take advantage of it - I didn't. Why not expect a reasonable rate of interest while you're waiting to pounce?

My only reservation is that other charges may swamp the cash interest effect. I believe Hoodless Brennan is one of the cheapest around. They only charge for transactions, not just for having an account. But their website for online transactions isn't the easiest - the Share Centre's is much clearer, and they're quite cheap too. But I don't know the what interest either of them pays, I'm afraid - maybe I'll go and find out. Here I'm talking about non-ISA accounts - personally I don't see the point of self-select ISAs as there is no tax advantage and brokers charge more.

Can anyone else help?

cheerfulcat

I fully understood the point, King Weasel. I don't think that the OP appreciated mine. S&S ISAs are intended to force the holder into stock market investments; they are not for long-term cash holdings. Nor, for that matter, are brokers' accounts.

FWIW, there has been some discussion on the Motley Fool about buying a cash unit trust holding mostly longer dated gilts in an ISA. Most brokers say it can't be done but Barclay's say you may hold a Fidelity and an M&G fund. Main thread here. There is some further discussion here.

( PS My answer might have been a little less testy had the OP posted as in the second post, without the hysterics...)

debbie42

King_Weasel wrote: »

If you didn't see it coming you needed to have cash deposited with your stockbroker to take advantage of it - I didn't. Why not expect a reasonable rate of interest while you're waiting to pounce?

If it's not in an ISA then I don't see the problem. I keep my cash stored in my current account which pays a reasonable rate of interest. It's one click to transfer it to my broker.

The cash (and shares!) in a share ISA wrapper is another issue. My understanding is that a share ISA isn't intended to hold cash, long term.

There was a recent discussion thread on this at TMF. (May need to register to read it?)

Browntrout_2

Check out Hargreaves Lansdown, they have a tiered system of rates up to 4.2% net

http://www.h-l.co.uk/our_services/interest_rates_isa.hl

Their dealing charges are higher for shares but their charges for funds are excellent.

King_Weasel

Cheerfulcat, I guess weasels have thick skins (not so sure about kings), so don't worry about a bit of testiness.

I'm not here to fight JM-2's battles, but I didn't read their problem as relating to LONG-TERM cash holdings, as cheerfulcat and debbie42 evidently believe. Tonight's FTSE is the highest for years. Suppose JM-2 wants to take profits and reinvest at the next dip? This might be months away. Why not have a reasonable return on the cash meanwhile? That's all.

But I was interested in what debbie42 says, as this matches my situation of holding shares outside an ISA. (I've started another thread here on the pros and cons of self-select ISAs.) I was under the impression that I needed the cash in place before I bought shares. Like debbie42, I can transfer cash with one click but I thought it took 2-3 days to arrive and my broker needed the cash before buying.

Am I wrong on either or both of these points, or does debbie42 have a better bank and/or broker? (Or maybe debbie42 can see 2-3 days ahead?)

I'm hopeful I've solved my problem here, if not JM-2's.

StevieJ

When I buy funds with H&L I pay with a debit card.

JM_2

King_Weasel wrote: »

I'm not sure cheerfulcat has appreciated your point, jm-2. The Stock Market did a bit of wobbling a few weeks ago. If you didn't see it coming you needed to have cash deposited with your stockbroker to take advantage of it - I didn't. Why not expect a reasonable rate of interest while you're waiting to pounce?

I am pleased that you appreciate my dilemma.

There are times when an investor wishes to hold cash awaiting investment.

The rules allow investors to hold cash in such cases.

There is no excuse for plan managers to take advantage and pocket most of the interest earned.

Stockbrokers are supposed to be agents. They are supposed to get the best deal for customers. Not fleece them.

There are now so many instances where Financial Institutions are ripping us off. eg : Bank penalty charges , Interest rates on existing Saving Accounts being lowered, Charging excessive interest rates on loans etc.

JM_2

Browntrout wrote: »

Check out Hargreaves Lansdown, they have a tiered system of rates up to 4.2% net

http://www.h-l.co.uk/our_services/interest_rates_isa.hl

Their dealing charges are higher for shares but their charges for funds are excellent.

Thanks for the link. That looks more reasonable.


JM_2