MSE News: Help to Buy ISA rates begin to be unveiled

MARTYM8`

Love the apparent rates for the Yorkshire/Clydesdale help to buy isa

http://www.cbonline.co.uk/personal/savings/tax-efficient-savings/help-to-buy-isa/

Why would anyone invest over £12k in a help to buy isa getting less than 1% when the maximum 25% bonus is on that sum. Do they even understand the product?:D

Amount of savings Tax free/AER rate (%pa)*
£30,000 and over 1.00%
£15,000 - £29,999 0.90%
£1 - £14,999 0.70%

colsten

The YB/CB rate is an insult, and the 2% ones aren't much better either, given that Halifax can stretch to 4%. But I fear they will get some takers, as some people seem to get completely hypnotised by the "tax free" badge of the account and won't even shop for a better HTB ISA rate.

MARTYM8`

colsten wrote: »

The YB/CB rate is an insult, and the 2% ones aren't much better either, given that Halifax can stretch to 4%. But I fear they will get some takers, as some people seem to get completely hypnotised by the "tax free" badge of the account and won't even shop for a better HTB ISA rate.

Its more funny than an insult.

You would need to pay in £200 a month for over 12 years to reach the £30k needed to earn 1%. Yet once you reach £12k is there any point carrying on with the product anyway as that's when you get the maximum £3k bonus.

I can forgive the 0.7% - but the 1% on over £30k is amusing as it suggests whoever designed it does not understand the help to buy isa.

colsten

There are tens of thousands of people who have lots of money sitting in ISAs and other savings accounts that pay less than 1.5% interest.

I seem to remember it's about £7 billion (yes, billion) lingering in such accounts (some sort of an FCA investigation has been going on about this for months).

CB/YB are obviously aware of these statistics, and think they can catch more unsuspecting savers. From their point of view, it's exactly the right thing to do -- - why pay 4% when you can get away with paying 1%?

I know it's sort of laughable and funny, but I still think their HTB ISA rate is an insult to thinking people.

Rich2808

colsten wrote: »

There are tens of thousands of people who have lots of money sitting in ISAs and other savings accounts that pay less than 1.5% interest.

I seem to remember it's about £7 billion (yes, billion) lingering in such accounts (some sort of an FCA investigation has been going on about this for months).

CB/YB are obviously aware of these statistics, and think they can catch more unsuspecting savers. From their point of view, it's exactly the right thing to do -- - why pay 4% when you can get away with paying 1%?

I know it's sort of laughable and funny, but I still think their HTB ISA rate is an insult to thinking people.

Yes - but as has been pointed out you would need to save the maximum permitted £200 a month in a YB/CB HTB isa for 12 years to get 1 per cent by having invested over £30k. Why on earth would even do that when you get the maximum bonus on £12 k. It's quite extraordinary.

colsten

Rich2808 wrote: »

Why on earth would even do that when you get the maximum bonus on £12 k. It's quite extraordinary.

For the same reason that people would put any money into a non-HTB cash ISA. Unfortunately there are plenty of people who do that.

The real question shouldn't be why you'd want £30K in an HTB ISA (would take over 14 years to get there, and that's obviously utterly ridiculous), but why you would want to save you near-term HTB ISA money into a 0.70% account when you can very easily get 4% AER - - - over 5 times as much as CB/YP would pay? It's an insult.

jimjames

Rich2808 wrote: »

Yes - but as has been pointed out you would need to save the maximum permitted £200 a month in a YB/CB HTB isa to get 1 per cent by having invested over £30k. Why on earth would even do that when you get the maximum bonus on £12 k. It's quite extraordinary.

It is extraordinary. But then so is the number of people who've appeared on the forum today who've put money into cash ISAs this year getting 1% when they could have got 5% elsewhere yet are completely oblivious to their loss of interest. It still seems that getting something tax-free holds more attraction than getting a decent return.

colsten

jimjames wrote: »

It still seems that getting something tax-free holds more attraction than getting a decent return.

I am in some sort of deep shock over the number of people who seem to opt, or even worse - - promote!!!, a tax-free account without even looking at how much money could be made in a taxable account.

I appreciate if there was a mass-assault on the great current and regular savings accounts, their interest rates might drop rapidly. But lets cross that bridge when, and if, we come to it.

Particularly young people, who have to count every penny, should be encouraged to work out what their best deals are. Instead, many are encouraged to blindly go for cash ISAs. It's disturbing.

davidgmmafan

I'm not really clear who this scheme is supposed to help. People who can afford to save for a deposit or have help will be doing so anyway. The people to can't will be wasting money on exorbitant rents.


The housing market is broken and this sticking plaster will not fix it.

colsten

You don't have to avail yourself of the HTB ISA if, as a prospective first time buyer, you disagree with it.

To try and make political mileage out of what appears to be a popular offering is really cheap, and not exactly a winning proposition. If you have a better scheme in mind, why not send your detailed costed proposals to George Osborne? You could make history if you have an idea nobody else has thought of yet.