Fixed isa transfer question

dave_154

I was going to open a Fixed isa but the term is fixed for two years. Wanted to know could I transfer the full amount before the two years is complete? Also when I transfer will the old isA be closed automatically or do I need to close it somehow? If so does each bank have different closing procedures?

Tanks

masonic

It depends on the T&Cs of the ISA, but HMRC rules mean that these accounts are usually available to transfer/close early subject to an interest penalty.

badger09

dave_154 wrote: »

I was going to open a Fixed isa but the term is fixed for two years. Wanted to know could I transfer the full amount before the two years is complete? Also when I transfer will the old isA be closed automatically or do I need to close it somehow? If so does each bank have different closing procedures?

Tanks

Why would you save in an ISA fixed for 2 years if you might want to transfer it before the end of the 2 years :cool:

dave_154

Because interest rates have surely got to go up in the next 18 months with economy improving so I wanted to lock away for higher interest then switch when rate goes up

Archi_Bald

dave_154 wrote: »

Because interest rates have surely got to go up in the next 18 months with economy improving so I wanted to lock away for higher interest then switch when rate goes up

I can't follow you...interest rates might not go up but if you think they are going up, why would you lock yourself into a fixed term deal that makes it impossible for you to jump onto the higher rates?

masonic

Interest rates might be raised in response to high inflation, but at the moment the worry is the opposite and a further reduction in the base rate is not out of the question. Low inflation is bad for the Government when they have huge debts that are not being inflated away, so I think a rise is unlikely unless inflation really takes off.

You also have to consider what effect a 0.25% rise (to 0.75%), or even a 0.5% rise (to 1%) in the base rate will have on fixed rate accounts offering 2% or more. Banks will still have access to cheap borrowings and so they still won't have much need for retail deposits. Unless they believe the base rate will be much higher in the medium term, there is no incentive to offer better savings rates.