New Question Added! 5 Year Virgin ISA @ 3%

Archi_Bald

I don't think we had any guarantee that an unemployment rate below 7% would cause a rise in interest rate. If I remember right, Carney said he would not consider an interest rate rise before unemployment has fallen below 7%.

He has also just watered down any expectations of any move in the short term: http://www.bbc.co.uk/news/business-25868380

This will be immensely welcome news to businesses and mortgage payers. It should therefore also be welcome news to savers since it would not be in the interest of savers if large sways of the country suffer from interest rate rises. Think about it. Savers don't exist in isolation. I am a saver and investor myself, btw.

libra10

I agree Archi Bald.

Long gone are the days of receiving 7% interest rates!

ceredigion

Unless im missing something , I don't understand the concerns about this particular isa. Withdrawals are permitted ,subject to a loss of 180 days interest on the amount withdrawn. So you can get your money if you want it and given the rate is roughly double ,an instant access isa . If you can keep the money there for more than 12 months, you are in front anyway. If rates happen to rise significantly ,you transfer out . But maybe its me that's got all this wrong.

jimjames

libra10 wrote: »

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.

I'm sure it wouldnt trigger an immediate rise. However if growth picks up significantly along with house price inflation then I think a rise is likely sooner rather than later.

The dramatic change from the situation in August to now shows how quickly things can switch round when 7% unemployment was seen as being 2-3 years away not a few months.

Vortigern

fozziebeartoo wrote: »

***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

Yes, you can open as many ISAs as you like, but you can only use ONE for the current year's allowance.

You could split your existing ISA and transfer the parts to several others, as long as the current year's contributions are kept together. i.e. You can't split this year's money.

fozziebeartoo

Thanks very much for the reply!!

Vortigern wrote: »

Yes, you can open as many ISAs as you like, but you can only use ONE for the current year's allowance.

You could split your existing ISA and transfer the parts to several others, as long as the current year's contributions are kept together. i.e. You can't split this year's money.

Old_Slaphead

libra10 wrote: »

I agree Archi Bald.

Long gone are the days of receiving 7% interest rates!

Not that long. I was getting 7% on NR 5 year F R Bond up to Sept 2013

pfpf

just thinking out loud really...

my current 2yr FRISA with Lloyds ends on the 27th Feb. with the 30 day time limit that this account has to get any funds in to it from account opening, does anyone have any advice as to when a safe date may be to open the Virgin ISA?

annoyingly my OH's ISA's are split, half mature (Halifax) on the 10th Feb but the other half is locked in the same (but Lloyds's version) ISA till 6th April. we had hoped to tidy things up on hers this year but cant decide now whether to at least get half into this Virgin one.

thoughts. thanks.

ScoobyZ

I'm not sure why people don't move over to the fixed. I'm considering it.

Do the maths.

£15,800 - If you leave it in at 1% for a year you will get £158

£15,800 - If you put it in a fixed (5 year virgin 3%) and withdraw it out after a year you will get deducted 180 days interest (half a year) so will get £237*

Now this assumes you want to draw it out and that there is an ISA rate over 3%. You would only draw it out if you could recoup the lost interest (£237) over any new deal you would find. So for instance you would need at least 4.5% over one year or 3.5% over 3 years.

Doesn't it seem like a no brainier to switch?

The figures for 2 years are even more favourable. £711 instead of £316 if you cancel after 2 years. If there is no better rate you will get the full £948 (Instead of £316).

Figures are approx as in year 2 you will get interest on your interest

Now with virgin you can only transfer in up to 30 days after opening so makes it worthwhile doing it just before (30 days max) new tax years assuming you have £5940 to transfer across (2014/2015 allowance).

Old_Slaphead

Or you could look at the Newcastle 5 year at 2.9% with 120 day penalty.

I've recently transferred my Nationwide Flexclusive isa there.

Psychologically I've deducted 1% off the balance so to me now it's a 2.9% instant access and I will only transfer once rates are higher than this (unlikely for a few years IMHO)