Fixed term ISA's; Why can't they pay the same rat as fixed rate bonds

Mikes_The_Name

Fixed/Term Rate ISA's are a con. We think all financial institutions pay a lower rate for fixed rate ISA's than on fixed term bonds. As it is the governnment who give the tax incentive should not financial organisations be forced to offer and pay the same rate for a fixed rate bond and fixed rate ISA if they are for exactly the same term.

rb10

Mikes_The_Name wrote: »

We think all financial institutions pay a lower rate for fixed rate ISA's than on fixed term bonds.

You are wrong to think this:

http://www.nationwide.co.uk/savings/savingspromises/default.htm

gadgetmind

Mikes_The_Name wrote: »

should not financial organisations be forced to offer

Absolutely not. This is a free market economy and the government should keep their meddling fingers out other than ensuring honesty, clarity, and unfettered competition.

leveller2911

gadgetmind wrote: »

Absolutely not.

This is a free market economy and the government should keep their meddling
fingers out other than ensuring honesty, clarity, and unfettered
competition.

I don't disagree but they already do with the HTB mortgage schemes.....Its a one way street at the moment, subsidising the "I want" and the f eckless and penalising the thrifty.

le_loup

gadgetmind wrote: »

Absolutely not. This is a free market economy and the government should keep their meddling fingers out other than ensuring honesty, clarity, and unfettered competition.

Yes, we are a bit short of unfettered capitalism in this country, particularly in the banking sector!

Archi_Bald

Mikes_The_Name wrote: »

Fixed/Term Rate ISA's are a con. We think all financial institutions pay a lower rate for fixed rate ISA's than on fixed term bonds.

Have you got examples?

Linton

Surely that's what one would expect in a capitalist system. The banks only need offer interest rates just sufficient to attract standard rate tax payers - ie 19% below the equivalent non-ISA account. Why would they offer anything else other than as a loss leader to gather more customers.

thenudeone

Mikes_The_Name wrote: »

Fixed/Term Rate ISA's are a con. We think all financial institutions pay a lower rate for fixed rate ISA's than on fixed term bonds.

No they don't. In my experience, the rates are usually the same.

Here's one I've just transferred to: http://www.newcastle.co.uk/savings/member-exclusives.aspx
Both are 5 year accounts and both pay 3.00% AER.

Which institutions do you think offer different rates?

A non-ISA fixed rate account usually prevents any access to your cash at all. However, with a fixed-rate ISA you can ALWAYS access your cash (although there is often a penalty of up to 6 months interest), so an ISA is a better features than the non-ISA equivalent, so you could justify a lower rate.

opinions4u

For every example the OP can give of FRISA rates being lower than a term deposit with the same provider I can probably give two where the FRISA rate is the same or higher.

FRISAs attracts lower average balances than term deposits and an element of HMRC red tape to comply with. So should, logically, pay a little less than a term deposit. But the differential shouldn't be more than 0.05% to cover this.

gadgetmind

le_loup wrote: »

Yes, we are a bit short of unfettered capitalism in this country, particularly in the banking sector!

Agreed. The government are distorting savings rates via QE, and some more direct lending schemes, so capitalism is wearing a low-interest muzzle.

You may like this, others don't ,but I don't care as I'm prepared to asset and globe trot to find returns.