why are ISAS so low when some current acounts are 4%

tir21

is it because those 4% accounts only offer interest on a certain amount

thanks

Shark

So banks can advertise their other products such as mortgages and credit cards. Every time I log into Nationwide they have another "great" deal for me.

Offer a loss leader current account to get a hopefully loyal customer.

ChopperST

The idea with the high interest "current accounts" is to try and get you as a long term customer and sell you other products.

The banks don't need our money with all the QE funds washing around at near 0%

ChesterDog

Because they don't want your money, but they do want your longterm custom.

Herbalus

tir21 wrote: »

is it because those 4% accounts only offer interest on a certain amount

thanks

The limits are because the accounts will not be making the bank much (if any) money. A limit will limit their losses and still get you as a customer for other products potentially.

G_M

In addition o th above points, the 4% accounts are current accounts, not saving, so intended for daily use.

If used in that way (as intended by the banks) few customers would have the max amount allowed throughout the month.

It is only those customers (like us!) who use the accounts for savings, put the max allowed in, and leave it there earning the full 3-4%.

Linton

tir21 wrote: »

is it because those 4% accounts only offer interest on a certain amount

thanks

In addition to the valid points raised by previous posters:

Banks are competing with other accounts held in other banks. For an ISA they dont need to offer the same interest rates as a non-ISA account. They merely need to offer a little bit more than other accounts after standard rate tax. So if non-ISA accounts were paying 5% (one can hope!), banks only need offer ISAs at 4.1% to gain business.

jimjames

Linton wrote: »

In addition to the valid points raised by previous posters:

Banks are competing with other accounts held in other banks. For an ISA they dont need to offer the same interest rates as a non-ISA account. They merely need to offer a little bit more than other accounts after standard rate tax. So if non-ISA accounts were paying 5% (one can hope!), banks only need offer ISAs at 4.1% to gain business.

Non ISA accounts are paying 5%!

Linton

jimjames wrote: »

Non ISA accounts are paying 5%!

Its an example figure 'cos I cant be bothered to work out 20% of anything else and it makes the point clearer.

Thrugelmir

ISA's are expensive t operate. If you can't offer good long term fix rates why bother.

The current crop of current account rates can be changed tomorrow. So there's no lock in for the bank.

Guess they are expecting more QE at some point.