Dot ComUnity Credit Union - ISA

mt77

Hello,

Has anyone had any experience / issues with the above credit union? - Link: http://www.dotcu.org.uk/creditunion/savings/isa.html

I am thinking about joining the above credit union and transferring my cash ISA to it. 3% PA, no fixed term and with ISA transfer to it available, for £30 a year membership. It just seems too good to be true. Am I missing something here?

The way I read it - it beats just about any instant access cash ISA listed on MSE, as well as other fixed term ISA's. As I stated above, I must be missing something in order for it not to be listed as one of the 'best available' cash ISA on MSE front page.

Can anyone advise / state if I'm missing something here?

Thanks

MT

Edit: I have just noticed that there is a 90 days withdrawal notice. But it still seems pretty good. Anything else?

innovate

Could be a good deal for those who are happy to do postal access only and don't mind to pay £30 membership fee, which is an annual fee.

Of course the £30 comes straight off the interest you can earn, so the lower your balance, the more severe the impact on the effective interest rate.

For example, if you have £10K, your interest is £300. Take the £30 off and you are only left with £270. I.e. Effective interest rate is 2.7%.

If your balance is only £1K, your effective interest rate is zero after taking the membership fee into account.

If your balance is £100K, your effective interest rate would be 2.97%. Though it is questionable whether a small credit union could cope with such a big balance from a single saver.

It also is a fixed term deal - any withdrawals before maturity are subject to 90 days loss of interest.

mt77

Many thanks for your analysis on this Innovate.

I have around £40k to transfer after April 6, and possibly £49K by July, if I can muster up the additional 9k by then. This should make my £30 annual membership fee worth it. I shouldn't have a need to withdraw from this account either, as I haven't withdrawn from my ISA in the last 5 years and I have additional reserves in other accounts if required. So this does seem ideal in my case.

I am just concerned (and surprised) why this credit union has no mention of it on this site, or on any other comparison site for that matter. As you mention it seems to be a good deal, especially for those who have transfers of more than £10k and can fix for a year. My concern is because I have never been with a credit union before, so I unsure about their reputation. I suppose they can't be any worse than banks.

Thanks again.

innovate

You have FSCS protection, unless the site is fake - best to check against the FCA website. If you think it's kosher, move fast since anything that's been mentioned on MSE can be very shortlived. Small companies can't usually sustain an onslaught by MSE.

hgt

Thanks cookie2508 for the information. The DotComUnity ISA does indeed appear to be market leading by quite a considerable margin. I have a few questions which I'm hoping you can answer please:-

1) Is membership (and the ISA account) really available to everyone?
2) Do you offer any form of online banking in order to check balance etc?
3) Is the rate on the ISA fixed at 3% for 12 months, or is the rate variable?
4) Do you need to open and fund a share account as well as becoming a member of the Credit Union?
5) I notice that transfers-in of previous years ISA allowances is allowed, is there any limt on this amount?

Appologies for all the questions - this account does interest me, but I can't help thinking of the old saying.... If something sounds too good to be true...

Many thanks.

innovate

3% is good for a Regular Saver ISA but it isn't the best interest rate you can get. They have also already pulled their transfer form. Their transfer in was a major differentiator but that appears gone now.

DesG

10. Interest can be paid to any DotComUnity Credit Union Account, or to a third party bank or building society
account, details to be advised to the Credit Union in advance of the Maturity date otherwise the Interest will
be credited to your DotComUnity Credit Union Savings Account.

Is there not an option to pay the interest into the ISA?

mt77

innovate wrote: »

3% is good for a Regular Saver ISA but it isn't the best interest rate you can get. They have also already pulled their transfer form. Their transfer in was a major differentiator but that appears gone now.

I noticed this too, but their site does state that you can email them for the ISA transfer form. Have you tried emailing them for the transfer request form? (I have registered for an account but haven't paid my membership yet / or setup ISA account yet.)

You also mention that 3% isn't the best you can get, care to mention any others that provide better returns?

Thanks for your help.

MT

innovate

I am pretty sure the reason why they want you to contact them about transfers is so that they can make a decision whether they actually want to / can afford to take you on. They might be quite happy to let you transfer a few K in, but they'd soon run out of steam if they get a few big hitters with tens of K, or massive numbers of smaller balances.

I haven't applied and won't since my ISAs will all be S&S this year, incl transfers of some maturing cash ISAs.

As to better rates than dotcommunity - one that I remember is the Nottingham Reg Sav at 4%. Also, the Nationwide one at 2.5% looks a better deal since you could save up a lot of your money (at least £9K) in current accounts with way better interest and then fill up the ISA with a lump sum next March. The saving up in current accounts would most likely work with lots of instant access ISAs that allow you to put a lump sum in next March. The interest rate of the ISA for 2014-15 then becomes almost irrelevant since the only reason you would want the 2014-15 ISA would be to use up your allowance. You would probably look to transferring your ISA elsewhere for 2015-16 anyway. Though anything about 2015-16 is all a bit crystal ball stuff right now

innovate

I might be wrong but it seems they haven't got any statement on their website about the £15K limit. Might not be an issue for everybody but worth checking if you actually want to max your allowance.

hgt

innovate wrote: »

3% is good for a Regular Saver ISA but it isn't the best interest rate you can get. They have also already pulled their transfer form. Their transfer in was a major differentiator but that appears gone now.

But the DotComUnity ISA is not a regular saver is it? From what I can see, it is essentially a 1year fixed rate with instant access (loss of 90 days interest). In which case it beats the competition by miles. I've been reading the Ts&Cs but can see no mention of this being a regular saver. In fact it states that after your initial deposit, you can only make additional deposits while the account is a current issue.