Banks and ISAs and Peer-to-Peer Lending

fridae

Hi,

Does anyone know of the best place to put money? I am particularly concerned to hear of any banks that don't build ISAs on quicksand! Because of greedy banks, each year, probably like the reader, I have to undergo the same tortuous and time consuming activity of finding the best home for our savings before the sands shift and our ISA sinks to a lower interest rate. For example:

I open an ISA with a bank at 2.5%, but after 12 months it reverts to .05%. The bank advise of this at inception and even send out letters nearing the time of reduction, but as people lead busy lives, most forget and the interest drops to .05%; which in my view, is what the banks rely on. This used to be me until I retired and although now I have the time to keep on top of these changes; as I said previously, it is time consuming at a time of my life when I want to dictate how I spend my time.

I recently had a telephone call from Santander stating the bank had noticed my money was not producing the returns it might and asking me to make an appointment to see one of their financial people to discuss better ways to use my money. At the interview I was advised that if I opened a 123 account I would get an extra .05% on my ISA - WHOOPEEE!

Other things were said that quite frankly annoyed me such as: "we have other products ", like an ordinary savings account that was better than my ISA because it enabled me with a MASSIVE .25% after tax. First off I pointed out that banks do not have products because they do not produce things. Ford motor company produce things and Dell computers produce things. Banks are masters of illusion that indulge in slight of hand to confuse and deceive. She didn't like that and I realised that although I might have satisfied my desire to put banks in their place, I was not getting anywhere as regards finding a better home for my savings.

Historically, ISAs, and TESSAs before them, were brought out to encourage people to save and the incentive was that no tax was paid on interest. But when the interest is practically negligible, what's the point in having ISAs? Using dirty tricks, only the banks prosper to paraphrase Thomas Jefferson who warned against letting the banks fall into the hands of privateers.

I am considering peer-to-peer lending, but I have no experience and was wondering if anybody here has experience and as such tips and advice.

In closing, any positive information on ISAs and banking generally, and peer-to-peer lending would be gratefully received by me and, I would imagine, by lots of other people in these forums.

Thanks for patiently listening to my rant.

jimjames

If you're putting money aside long term then cash ISAs are not a good idea but you could use S&S ISAs instead. Advantage is that you don't need to keep moving them like cash and it may be an advantage to not check and panic if they have changed in value.


For short term savings current accounts and regular savers give far better returns than cash ISAs. I get 5% on all my cash savings as a result, I doubt you'll find any ISA paying that.


Rather than ranting why not beat the banks at their own game.

Sam_J12

I would not touch P2P lending with a barge pole. Hugely risky in my opinion and a lot of people are going to get seriously burnt by it. If you are investing for the long term (at least 10 years) then in my opinion you should consider equities. Something like a global or US equity tracker. I doubt anything will beat those returns in the long run.

Thrugelmir

fridae wrote: »

The bank advise of this at inception and even send out letters nearing the time of reduction, but as people lead busy lives, most forget and the interest drops to .05%; which in my view, is what the banks rely on.

Makes you wonder how people use to cope before the internet era. Worked longer hours too.........

Perhaps people are just lazier and expect everything to be done for them these days.

sharpe106

Sam_J12 wrote: »

I would not touch P2P lending with a barge pole. Hugely risky in my opinion and a lot of people are going to get seriously burnt by it. If you are investing for the long term (at least 10 years) then in my opinion you should consider equities. Something like a global or US equity tracker. I doubt anything will beat those returns in the long run.

I agree p2p is risky but then so is most stocks and shares

DiggerUK

P2P returns a little more than savings; and about the same as equities.
P2P has no government protection; equities and savings in schemes based on equities, not much more.
P2P is a trapdoor waiting to open; equities are risk laden.

It is not easy, that's for sure. But please give P2P a wide berth, see the thread on the subject.

Cash ISA's, NSI products and a/c's that allow you a tax free savings limit are best options for you it seems..._

agent69

Sam_J12 wrote: »

I would not touch P2P lending with a barge pole. Hugely risky in my opinion and a lot of people are going to get seriously burnt by it.

I don't understand why people make such damning comments without offering any facts or evidence to support their position.

P2P has been around for about 10 years and I suspect that most people who have carefully invested in it will have done quite nicely from it. I'm not aware that the internet is awash with stories of people who have lost their life savings as a result of a P2P collapse. Most of the adverse comments come from ill advised people who predict disaster in the future, but don't say when or why.

Like stocks and shares, there are different risks associated with the various P2P platforms. I would think that the likes of Zopa and Ratesetter are a lot less risky that equities, and will probably produce better results in the long term.

ChesterDog

I agree.

P2P has its own particular risks, certainly.

But it is but one basket.

Lots of eggs, lots of baskets is the way.

colalba

I look after finances for a few relatives and it has really become quite annoying having to look for new cash isas as the rate drops. I have noticed that in recent times Nationwide seem to have stopped this approach. The rates aren't the best in market obviously (1.2% instant access I think) but I think the stability is worth something. (They have also committed to not offering better deals to new customers than old). Obviously another approach is to lock in a rate for a number of years than you don't have to worry about moving at the end of first year when bonus stops.


As has been said many times on this forum you may actually get a better rate outside an ISA. Santander 123 at 3% was the best for a while but their fees go up significantly in January.


As others have said p2p is more risky and your money is not protected but the reward can be greater too. Can't really be compared with savings accounts. Better to think of it as investing more akin to shares/funds. Nothing wrong with it as long as you do your research, only invest a small part of your assets and are aware of the risks. Search this forum for threads on the subject or have a look on http://p2pindependentforum.com/

Archi_Bald

colalba wrote: »

I look after finances for a few relatives and it has really become quite annoying having to look for new cash isas as the rate drops. I have noticed that in recent times Nationwide seem to have stopped this approach. The rates aren't the best in market obviously (1.2% instant access I think) but I think the stability is worth something. (They have also committed to not offering better deals to new customers than old).

Are you sure you understand Nationwide's ISA offerings? Their best instant access ISA was until recently 1.6%, and it now stands at 1.5%. Pretty much top of what you can get anywhere for instant access ISAs. Other than that, moving your cash savings to better accounts if any come along has been something my mum taught me in the 1950s, and I she had learnt it from her dad.

colalba wrote: »

Santander 123 at 3% was the best for a while but their fees go up significantly in January.

The 123 has not paid the best interest for several years now. There have been, and still are, several other accounts that have better rates than the 123. That is true for more than £20,000, too. http://forums.moneysavingexpert.com/showthread.php?t=5374614

agent69

Archi_Bald wrote: »

The 123 has not paid the best interest for several years now. There have been, and still are, several other accounts that have better rates than the 123. That is true for more than £20,000, too.

Heard it all before, still waiting for the proof