Worth fixing for a year for 2%

hufc2002

Hi all

My wife's Virgin E-ISA issue 1 rate is dropping to 1.5% however they have some exclusive fixed rate offers for an alternative ISA. These are:

2% until 26th May 15
2.4% until 26th May 17
3% until 26th May 19

Given the terrible rates at the minute, do you think it's worthwhile moving to the 2% fixed rate for a year? Can't see getting anything better.

Cheers

foreversummer

I've gone for a five year fix at 3% with Leeds BS (now withdrawn) as you can withdraw/transfer the money at any time. There is a 240 day interest penalty for doing so, but on on the figures if you leave it there for 18 months, taking into account the loss of interest, you would still get 2% overall, any longer of course and you will get near to the 3%.

Worth checking if you can access your money in the Virgin one if rates rise in the years to come.

Foreversummer

ranciduk

Like a shot!

James01

Hi, I have just chosen to fix mine at 2%, it says that the interest is the same whether paid monthly or yearly, so I chose monthly but the rate shows at 1.98% not 2%, I know it's a tiny amount but I was wondering the reason. I think it's something to do with AER, I think it's a bit misleading and might switch back to yearly interest.

Archi_Bald

It is normal that monthly interest is slightly lower than the AER because you get interest on interest when the interest is paid monthly.

The AER is the same whether your interest is paid monthly or annually. Meaning that the amount of interest you will have after 12 months is exactly the same, regardless of when the interest has been paid.

Triumph13

You should end up with exactly the same amount at the end of the year. The difference is that with the monthly you are getting a tiny bit of interest on the interest - hence the marginally lower apparent rate.

EDIT - Archi just beat me - must learn to type quicker!

James01

Thanks Archi and Triumph, that makes sense, I understand now. It shows how desperate things are when 0.02% is an issue!

itsanne

Apparently Santander's new ISAs, to be unveiled next week, will include a 2% easy access (2.3% for 123 bank account or credit card holders) : http://www.bbc.co.uk/programmes/b03xcrzm

Vortigern

itsanne wrote: »

Apparently Santander's new ISAs, to be unveiled next week, will include a 2% easy access (2.3% for 123 bank account or credit card holders) : http://www.bbc.co.uk/programmes/b03xcrzm

Easy access? The programme did not mention easy access for Santander's 2%/2.3% products. I believe those rates are for a 2 year fix. We'll know on Monday.

anna42hmr

Vortigern wrote: »

Easy access? The programme did not mention easy access for Santander's 2%/2.3% products. I believe those rates are for a 2 year fix. We'll know on Monday.

if the email from savings champion is right, you are correct thats for 2 year fix, this is what the savings champ email said the other day about santander's new rates:

Santander has announced plans to launch three new ISAs from Monday 10th March. Of particular interest is the new 2 Year Fixed Rate ISA paying 2.30% tax free/AER, exclusively available to those with a 123 current account, 123 credit card or for Santander Select customers. Also being launched is a 2 Year Fixed Rate ISA paying 2% tax free/AER that is open to everyone and a variable Direct ISA Saver paying 1% tax free/AER.

so if those are right, fixing at 2% for a year with virgin is a good one, especially if you do not want to fix for longer.

Archi_Bald

what is the rush? It's almost 4 weeks before the new tax year starts, so jumping into what's available today or tomorrow seems a rather panicky approach.