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Fixed ISA

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Hi,

sorry if I'm being stupid but here goes. I want to open a new ISA account. The best rate I've seen is 2.35 % with virgin money. This is fixed until 2021.

My question is, is this like a fixed mortgage? Presumably by 2021 interest rates will rise and there will be better accounts. If I then wanted to change to a better rate what happens?
Old Faithful we roam the range together,
Old Faithful in any kind of weather,
When the round up days are over,
And the Boulevard’s white with clover,
For you old faithful pal of mine.
Giddy up old fella cos the moon is yellow tonight,
Giddy up old fella cos the moon is mellow and bright,
There’s a coyote crying at the moon above,
Carry me back to the one I love,
And you old faithful pal of mine.

Comments

  • jimjames
    jimjames Posts: 17,762 Forumite
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    You need to check the T&Cs. Generally you'll have to pay a penalty interest charge to get money out of a fixed rate account.

    If you're prepared to lock up for so long wouldn't investments be worth looking at rather than cash? Or if you want the best return have you already filled the 5% current accounts? Whereabouts is the money at the moment that you're putting in the ISA?
    Remember the saying: if it looks too good to be true it almost certainly is.
  • G_M
    G_M Posts: 51,977 Forumite
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    The virgin website makes it very clear:
    * no withdrawals during the fixed rate period
    * a longer term savings option - great for lump sums
    (though use of the word 'great' is somewhat subjective!)

    http://uk.virginmoney.com/savings/find/results/#isas
  • murphster
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    jimjames wrote: »
    You need to check the T&Cs. Generally you'll have to pay a penalty interest charge to get money out of a fixed rate account.

    If you're prepared to lock up for so long wouldn't investments be worth looking at rather than cash? Or if you want the best return have you already filled the 5% current accounts? Whereabouts is the money at the moment that you're putting in the ISA?


    I don't have a lot to invest. I have an ISA which with IF which I am using as a deposit for a house. I'm just trying to sort out my finances for when I move, want to try and save a bit each month and am looking at the best place to do that.
    Old Faithful we roam the range together,
    Old Faithful in any kind of weather,
    When the round up days are over,
    And the Boulevard’s white with clover,
    For you old faithful pal of mine.
    Giddy up old fella cos the moon is yellow tonight,
    Giddy up old fella cos the moon is mellow and bright,
    There’s a coyote crying at the moon above,
    Carry me back to the one I love,
    And you old faithful pal of mine.
  • jimjames
    jimjames Posts: 17,762 Forumite
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    murphster wrote: »
    I don't have a lot to invest. I have an ISA which with IF which I am using as a deposit for a house. I'm just trying to sort out my finances for when I move, want to try and save a bit each month and am looking at the best place to do that.

    If that's the case then a cash ISA is pretty pointless when you can do far better elsewhere with up to 6% available. Also seems a bit strange to tie it up for 5 years if you need it to move house.

    Are you already paying into a HTB ISA?
    Remember the saying: if it looks too good to be true it almost certainly is.
  • murphster
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    jimjames wrote: »
    If that's the case then a cash ISA is pretty pointless when you can do far better elsewhere with up to 6% available. Also seems a bit strange to tie it up for 5 years if you need it to move house.

    Are you already paying into a HTB ISA?

    I'm moving house in a couple of weeks and am about to transfer the money from my current ISA ready for completion. I'm just trying to sort things for when I move so I can start building up a 'nest egg'. Where are these 6% accounts, on moneysupermarket the best I've seen is that cash ISA. I don't like risk I just want somewhere to put a little bit away each month.

    Sorry if I sound really stupid. I can be careful with money and put some away but am completely rubbish with knowing where's best to put it.
    Old Faithful we roam the range together,
    Old Faithful in any kind of weather,
    When the round up days are over,
    And the Boulevard’s white with clover,
    For you old faithful pal of mine.
    Giddy up old fella cos the moon is yellow tonight,
    Giddy up old fella cos the moon is mellow and bright,
    There’s a coyote crying at the moon above,
    Carry me back to the one I love,
    And you old faithful pal of mine.
  • jimjames
    jimjames Posts: 17,762 Forumite
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    If you look at the links at the top of the page they'll show you.

    http://www.moneysavingexpert.com/savings/which-saving-account?_ga=1.211155733.1810538765.1452639697

    Zero risk with any of these options and all mainstream banks
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Flobberchops
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    2.35% is good by 2015-16 standards, but it may be mediocre or even sub-par by 2020-21 standards (shh, a guy can dream). Taking out a fixed-rate investment in a period with a rock-bottom base rate is almost asking for trouble since rates can only reasonably go up from here - and in fact a rate hike is long overdue. The Yanks finally raised their base rate last year so the consensus is that we'll probably follow suit sometime between now and 2017.

    If it's a sum in the order of a few thousand, probably best to use high-interest current accounts.
    : )
  • colsten
    colsten Posts: 17,597 Forumite
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    You don't want to have your 'nest egg' locked away in a 5 year fixed term account when you just move house. You'll need instant access to cash for all sorts of reasons when you are in a new house.

    Also, you cannot "save a bit each month" into a fixed term account. You have a very limited window of deposits, may be even just one single deposit at time of opening.
  • eskbanker
    eskbanker Posts: 32,015 Forumite
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    jimjames wrote: »
    If you look at the links at the top of the page they'll show you.

    http://www.moneysavingexpert.com/savings/which-saving-account?_ga=1.211155733.1810538765.1452639697

    Zero risk with any of these options and all mainstream banks
    Not strictly true, although 'minimal risk of capital loss subject to FSCS limits' would probably be fair!
  • Eco_Miser
    Eco_Miser Posts: 4,710 Forumite
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    murphster wrote: »
    I'm just trying to sort out my finances for when I move, want to try and save a bit each month and am looking at the best place to do that.
    Best place for saving from income is a monthly saver/regular saver account. This link lists all the 6%,5%,4% savers and 5%, 4%,3% current accounts. Conveniently the 5% and 4% current accounts are pre-requisites for the matching 5% and 4% savers.

    From April most people will have a £1000 tax allowance for interest, so a cash ISA will be pointless for them.
    Eco Miser
    Saving money for well over half a century
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