Virgin ISA 1yr or 3yr or 5yr

Smithers37

Hi folks,

I have about £10,500 that I want to put away in a ISA. I'm currently a Virgin ISA customer and they have offered either:

- 2.0% Fixed for 1 year - withdraw 60 day interest penalty

- 2.4% Fixed for 3 years - withdraw 90 day interest penalty

- 3.0% Fixed for 5 years - withdraw 180 day interest penalty

I'm looking to only really save for a few more years and if I can and put down a deposit on a house, however I don't know if this is possible; so I'm open to saving a bit longer.

My options are:

- Go for the 2.0% fixed and hope that rates improve (and not drop) before the year is up then transfer out

- Take out a longer term fixed account and accept that I may lose out in the future if rates go up and potentially lose interest through withdraw penalty if I do decide to buy a house.


Any suggestions or alternatives are welcome. Thank you. :beer:

greenglide

Smithers37 wrote: »

I have about £10,500 that I want to put away in a ISA.

Is this a cash ISA? The annual limit is only half of that.

Are you proposing making two payments? One in this tax year and one in next?

Smithers37

greenglide wrote: »

Is this a cash ISA? The annual limit is only half of that.

Are you proposing making two payments? One in this tax year and one in next?

Hi,

Whoops, sorry I typed while I was in a bit of a rush. I have a Cash ISA at 1.75% with £10500. I would be transferring it over, however I've not used my allowance this year . This year I've put all my money between a Lloyds account and a Nationwide account as it didn't make sense to top up my poxy cash ISA.

Cheers

hgt

I'm also an existing Virgin ISA customer in a similar situation to you.... I've gone for the 1-year fix, as I think 3 or 5 years is a bit too long in the current climate. Surely rates must start to rise within the next 3 years! So I will fix for a year, then see what's available then I think.

wesleyad

It's late and i so I may be well off on this, but basically theres going to be a break even date at some point where the money gained from the extra interest is more than the penalty of 180 days.

To me that looks like around 14 months. Anything over this time and you are better off with the higher interest account.

Smithers37

Hello folks.

After some serious thinking, I've decided to fix for 3 years at 2.4% for a couple of reasons which I'll list in case anyone else is in a similar position.

I've transferred 10.5K from cash ISA and I've also deposited £1500 so that I'll have 12K fixed until May 2017.

- 2.4% is still currently beating inflation

- From what I've read, I don't think we'll see much better for the next year or so.

- 3 years time is when I'll be looking to buy anyway, and the loss of interest penalty I won't care for as I'll be too psyched about buying a first property.

- If I continue to save £6000 a year (£500 a month) then by the maturity date I will have saved £30K plus interest (hoping that house prices wouldn't have risen too much by then)

- I can forget about that money now for 3 years and won't have to keep looking (and being disappointed) with interest rates.


So all in all, I'm very happy that I've come to a decision. Many thanks for your contributions. X

Archi_Bald

Don't think you can add £500 a month to this fixed term ISA.

Smithers37

Archi_Bald wrote: »

Don't think you can add £500 a month to this fixed term ISA.

Indeed. I have 30 days to deposit any more money, so I may put £500 at the end of the month (when I get paid) before the ISA deadline; then I can look at a regular savings account or a TSB account.

I still have £2000 of 'room' in my Lloyds account anyway so I have 4 months basically to sort something out.

Thanks for the heads up though.

hgt

Smithers37 wrote: »

Indeed. I have 30 days to deposit any more money, so I may put £500 at the end of the month (when I get paid) before the ISA deadline; then I can look at a regular savings account or a TSB account.

I still have £2000 of 'room' in my Lloyds account anyway so I have 4 months basically to sort something out.

Thanks for the heads up though.

If you're in the market for a regular savings ISA, I can recommend this one from Newcastle Building Society... http://www.newcastle.co.uk/savings/big-home-saver.aspx
3% and you can deposit up to £500 per month (be careful not to go over the ISA limit for the year of course).
Despite this being called the Big Home Saver ISA, you are under no obligation to have a mortgage quote from them.... though then again, you are saving for a house!

Smithers37

hgt wrote: »

If you're in the market for a regular savings ISA, I can recommend this one from Newcastle Building Society... http://www.newcastle.co.uk/savings/big-home-saver.aspx
3% and you can deposit up to £500 per month (be careful not to go over the ISA limit for the year of course).
Despite this being called the Big Home Saver ISA, you are under no obligation to have a mortgage quote from them.... though then again, you are saving for a house!

That's a useful find, thanks hgt! :beer:

Nationwide do a similar deal, however it's only 2% - Looks like I have a few options available to me.

Jenny1983

you have to be rich to use ISA, cause normal people don't have that much cash lying around