Easy Access or Fixed Rate ISA for me?

Shenron

I currently have my money in an easy access ISA, but the variable interest recently changed and is now REALLY low, so keeping my funds in there is not an option.

The problem that I now have is that I am unsure whether to open another easy access ISA or go for a fixed rate ISA (possible 2 or 3 years).

I should point out that normally I would be tempted to go with the fixed rate ISA because I am happy to lock my money away for a higher interest rate, however my issue is that I do not have a lot of funds in my current ISA at the moment, but I am very likely to be getting a large bonus at the end of this year.

If I were to open a fixed rate ISA now (January 2015) that lasts 2 or 3 years, would I be right in assuming that once I have transferred my existing ISA, I won't be allowed to add the additional funds that I will receiving at the end of the year (December 2015)?

Basically, I just want to know what my best option is.

I appreciate any comments and can provide additional info if necessary (except my bank details of course, haha).

Huge thanks in advance!
Melissa

pinkdalek

Renew it for now to a variable one that let's you access/transfer out/change.
You tend to find better deals towards tax year end, especially on Fixed Rate ISAs.
I'ts only a couple of months away, if you fix it now you would be stuck with that deal.

bsms1147

You could fix now for 2-3 years, then you will obtain a new ISA allowance in April anyway, which will still be there come December when you feel you will have more funds available. You can open a new ISA every tax year (April to April).

Better options for most people are outside of ISAs, with rates of up to 6% on savings products and 5% on current accounts.
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

Shenron

bsms1147 wrote: »

You could fix now for 2-3 years, then you will obtain a new ISA allowance in April anyway, which will still be there come December when you feel you will have more funds available. You can open a new ISA every tax year (April to April).

Better options for most people are outside of ISAs, with rates of up to 6% on savings products and 5% on current accounts

So with Fixed Rate ISAs that are 2 or 3 years, do you get a new allowance every year?

So for example, if I open one now by transferring my existing ISA, will I then be able to add funds once more between April 2015-April 2016? And then once more between April 2016-April 2017?

Hopefully that makes sense.

bsms1147

Not usually, most fix rates only allow you to add funds in the first month or so - check each one's T&Cs. After that you'd have to open another fixed ISA, in a new tax year, for further funds.

Shenron

Cheers guys!
You have been very helpful

enthusiasticsaver

Most fixed rate isas only allow you to add funds at the start of the term.
It depends really on how much you have in your isa and how much you intend to increase it by your bonus. To be honest most isa rates at the moment are not good and can be beaten by high interest current accounts even allowing for the loss of tax free status. As the maximum yearly limit is now £15k if your isa and bonus combined came to less than that you could move your isa into a high rate current account until you get your bonus and then put it into a fixed rate isa if the rates have improved. It does of course though lose the tax free status but as most isas are only paying 1.5% and you can get up to 5% on some current accounts it would still be worth it. If you are only willing to lock away for 2 to 3 years I am not sure that the fixed rates are that much higher than the variable rates anyway.
I am turning my back on cash isas now and moving to stocks and shares but that is only feasible if you are willing to invest for 5 years or more.

Eco_Miser

Shenron wrote: »

So with Fixed Rate ISAs that are 2 or 3 years, do you get a new allowance every year?

So for example, if I open one now by transferring my existing ISA, will I then be able to add funds once more between April 2015-April 2016? And then once more between April 2016-April 2017?

Hopefully that makes sense.

You are confusing ISAs (the tax wrapper - you get one every year) with ISAs (the bank account - you can open one with new funds each year, but you can also keep them open for many years - which you must do for a multi-year fix, or you can open more than one in a year and transfer money into them from other ISA accounts)

So you can open a FRISA now, then between April and March 2016 open another, possibly with the same name as your present one, then another in 2016-7 etc.

Having said that, my last FRISA matures in May, and after that I won't have any cash ISAs as they're not worth-while for me - current accounts pay much better for the short-medium term cash and S&S ISA should be much much better long-term.

book12

If you want to put additional deposits, open a Barclays fixed rate ISA. It lets you put additional deposits as many times as you like until the end of the tax year.