New Question Added! 5 Year Virgin ISA @ 3%

edited 23 January 2014 at 1:11PM in ISAs & Tax-free Savings
24 replies 3.2K views
fozziebeartoofozziebeartoo Forumite
1.6K Posts
edited 23 January 2014 at 1:11PM in ISAs & Tax-free Savings
Like many others, my Nat West ISA rate drops to 1% soon.

I currently have around £15800 in there.

I don't have any plans for the money and have other savings easily accessible if an unforeseen incident happens.

I have applied online for the Virgin Fixed Rate Cash E-ISA Issue 62 (fixed till Jan 2019), very straightforward proceedure.

Now I just need to send off the transfer forms......

And there's my problem, I cant help thinking that there are good reasons NOT to go with this ISA, that I haven't thought of :o

Of course rates might go up elsewhere before the end of the term.....

But apart from that, what should I be taking into account???

I have never, ever tied up any money before (actually never had any money to tie up!! ;) ) so this is a big deal to me, whereas to someone more money-savy, maybe its not such an issue.

Anyway, any tips on what to consider before I send off the transfer form would be gratefully received, thank you.


***additional question***

If I decide NOT to transfer into the 5 year fixed ISA I have opened (no deposit made, already used my 13/14 allowance) am I right in thinking I could open a different (shorter) ISA as well????

Obviously I could open transfer my existing ISA funds into ONE account.

Is that right please? ie. can OPEN more than one, but can only DEPOSIT in one :o
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Replies

  • libra10libra10 Forumite
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    Interesting question as we're in the same boat.

    Nat West ISA rate soon to decrease, and have been looking at Virgin savings rates.

    There seems to be little competition available currently.
  • rancidukranciduk Forumite
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    5 years seems risky as hopefully the rates should improve in the next two years or so?
  • edited 21 January 2014 at 7:42PM
    maxinterestmaxinterest Forumite
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    edited 21 January 2014 at 7:42PM
    I'm in the same situation, I have a Nationwide ISA with £32K and the rate has just dropped down to 0.5% or something similar. I was thinking about transferring the lot to a Virgin 5 year 3% ISA as I don't intend to make any withdrawals. In fact I see you can add cash funds but only within the 1st 30 days so I might wait until mid March then I can add £5760 after 1st April for the new tax year. Not certain yet though as some say 5 years is too long a time as rates may well rise soon, what do you think?
  • Thanks for the comments so far.....

    I suppose seeing "Jan 2019" written down, really hammered it home how long 5 years is to tie up money (to me, at least).

    But 3% for 5 years versus 1.75/1.8% for 1 year???

    I just don't know how to decide....pros and cons list I suppose :o
  • edited 21 January 2014 at 11:18PM
    ceredigionceredigion Forumite
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    edited 21 January 2014 at 11:18PM
    Withdrawals allowed Yes, subject to a charge of 180 days’ loss of interest
  • Perhaps take the chance on waiting a month or two and seeing if anyone offers anything a little better towards the end then start of the tax year? There wasn't much happening last year, but the years before that did see a bit of upward activity.
    “In any moment of decision the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing at all.” - Roosevelt
  • Thanks for the thoughts - much appreciated :beer:
  • jimjamesjimjames Forumite
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    ranciduk wrote: »
    5 years seems risky as hopefully the rates should improve in the next two years or so?

    With the unemployment rate dropping very close to the BoE target level that in August 2013 was expected to only be hit in 2016 I think the chances of a rise in rates beyond what is currently expected is very high. The current situation is so fluid when a forecast from 5 months ago has already changed massively that I think the economy will pick up much faster than anticipated giving cause for rates to rise.

    It is sometimes said that interest rate policy is like pulling a brick with a piece of elastic. Imagine that multiplied 100x over when the impact of QE is taken into account.

    I would expect UK growth this year could be near 4% considering all the current forecasts have been upgraded recently so it will be interesting to see. I certainly wouldnt tie my money up for 5 years at current rates - I would however take a fixed rate mortgage at current rates and have already done so.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • DragonQDragonQ Forumite
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    Can't see this being worth it at all. I wouldn't be surprised if the base rate rose in 2014, if not surely it will by 2015.
  • libra10libra10 Forumite
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    Does anyone think that with employment almost decreasing to 7%, the figure at which Mark Carney said the Bank of England would consider increase interest rates, that they might just move the goal-posts?

    An interest rate rise at this stage would certainly not help growth in the economy, although it is what savers are anxiously waiting for.
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