When to fix?

surfinsfree

Hi,

I have around 80k in savings with the plan of paying my mortgage off when the fixed term ends in Jan 2018.

Should I put it into a 2 year fixed ISA now or wait and see if rates go up in Jan with BOE possibly increasing base rates?

Cheers.

Archi_Bald

Whatever you end up doing, you should not be putting more than £75K (incl expected interest) into a single financial institution as the FSCS protection will be max £75K.

In any case, the max you can put into an ISA this tax year is £15,240.

I can't see any rate rises in January 2016, and probably none for the rest of 2016 either. But I have no crystal ball.

surfinsfree

Thanks,

We have 40k in my own cash isa and 40k in my partners cash isa but neither performing well.
We would each transfer into a fixed 2 year keeping the money separate and well under the 75k protection limit.

Eco_Miser

In that case, you should look at the best interest-paying current accounts which pay more.

Archi_Bald

Beware the Santander 123 fee increase to £5

surfinsfree

I have thought about the High rate current account option and we have got the flex direct account with nationwide giving us the 4% return after tax on £2500. But when you look at the santander 123 etc after you pay the tax and the monthly fee it's only marginally better. As they have shown this week, they can and do change the conditions and rates on these accounts. I can get +2% fixed with virgin money and it is still in an isa. I know I won't need the money until Jan 2018.
It just seems switching current account and messing about constantly as rates and deals change is just not worth the hassle.
What I'm really after is advice as to whether people think fixed saving rates will get significantly better in the new year?? Or should I just fix now??

puk999

If you're going to remove your money from the ISA tax shelter to pay off your mortgage, you could remove some of it now and use the high interest current accounts. You'll have the personal savings allowance from April 2016 to boost your returns.

I sympathise with the hassle factor, and your point about banks changing their T&Cs to your disadvantage. You don't need to switch your main account though. If it's just the interest you're after you can open the account (e.g. TSB Classic Plus for 5%) directly. Or you can open another account with your existing bank and switch that to a high interest current account to also gain the switching bonus. You can use Tesco Internet Saver and Tesco Instant Access Savings to attach DDs to the account to be switched if you have no other DDs you can use.

I personally enjoy managing all these different accounts, but I work in an office all day with internet access so I can do this easily. I understand it could be a pain for others. A simple spreadsheet or two can help with managing them.