ISA rate cut, what to do?

Ljc80_2

Over the last 5 or so years I have been saving into a Nationwide loyalty ISA. The rate has been 1.4% which I was happy with. I like just having it all in 1 place rather than lots of current accounts. Now the rate is being cut to .25% so it’s time to reassess how I’m saving. Currently have saved £60k. I also have mortgages totalling £48k which has just been cut to 1.25% (variable rate also with Nationwide).

ive never transferred an ISA so is it fairly easy to do? See a couple at about 1.15% which I could go for. Alternatively I could just switch focus to paying off the mortgage!

eskbanker

I think many would pay off the mortgage if that still leaves a savings pot that's adequate for foreseeable needs, but transferring an ISA is straightforward if that's the route you choose, you just pick one that accepts transfers in and ask them to arrange it.

Ljc80_2

Thank you for your reply.

i think I might go with Kent alliance 1.15%. Quite like that the interest can be paid monthly as will be a good saving motivator! Are the likes of these likely to have their rates cut in the coming days/weeks? Be a shame to go to the hassle of switching for that to happen!

i haven’t put anything in my ISA since the new ISA year started. If I was to, does that mean I couldn’t then open the new one and transfer all the savings I’ve?

eskbanker

Ljc80_2 said:

i think I might go with Kent alliance 1.15%. Quite like that the interest can be paid monthly as will be a good saving motivator! Are the likes of these likely to have their rates cut in the coming days/weeks? Be a shame to go to the hassle of switching for that to happen!

It's Kent Reliance that you'll be referring to - I haven't followed all the recent rate movements but it's a variable rate account so don't bank on the rate staying the same (obviously you can fix a rate for a specified period if you want certainty).

Ljc80_2 said:

i haven’t put anything in my ISA since the new ISA year started. If I was to, does that mean I couldn’t then open the new one and transfer all the savings I’ve?

You can pay new money into no more than one cash ISA in any given tax year, unless you transfer the one you've paid into, in which case you can then continue paying into the new one as if you'd been doing so all along.

hgt

I would say it's quite likely Kent Reliance will drop their rate shortly. Nationwide were one of the first ISA providers to drop their rates following the Bank of England rate cut, Kent Reliance haven't adjusted any of their rates as yet. 

I'm in the same boat as I have the same ISA at Nationwide paying 1.4%. Have you perhaps considered the 2 year fixed rate ISA at Kent Reliance? That's where my money is going. It's 1.45% fixed for two years, so if you're quick you can get that before the rate drops. It all depends on if you're likely to need access to your ISA in the next two years... unlike normal (non ISA) fixed rate bonds, fixed rate ISAs do allow withdrawals however it is subject to an interest penalty 

With the Kent Reliance 2 year fixed ISA, the withdrawal penalty is the equivalent of 180 days of interest. So with some very rough maths that's roughly half a year of interest, so even if you were to need to withdraw from it, you'd still earn over 0.7% which is still more that at Nationwide! Though of course if you can keep your hands off the cash for 2 years, 1.45% is pretty much unbeatable at the moment. Another unusual feature of the Kent Reliance account is that it allows additional deposits (subject to annual ISA limits), so you could contribute to it in the current tax year and the next if you wanted. 

Ljc80_2

Yes that 2 year one does look attractive.

There is a possibility, but only that, that I may want access to the money over the next 2 years if we decide to move house.

If I choose to get the monthly interest payments, then at some point withdraw the money, how do they then take the 180 days interest penalty? Do they take it off the money i'm withdrawing?

Albermarle

There are a number of providers offering a two year fix with rates of 1.3% to 1.45% .
https://www.moneysavingexpert.com/savings/best-cash-isa/#fixed

 Before deciding, have a look at the reviews ( although do not take them too seriously as they can be manipulated) and search this forum for any negative or positive comments . They are all safe with up to £85K compensation if they went bust . However some seem to have better  customer service/slicker  systems.
I have just transferred my NW loyalty isa to a fixed rate isa with Aldermore. It took about 5 mins to open it on line and apply for transfer of the NW ISA.

notbritishgas

Albermarle said:

There are a number of providers offering a two year fix with rates of 1.3% to 1.45% .
https://www.moneysavingexpert.com/savings/best-cash-isa/#fixed

 Before deciding, have a look at the reviews ( although do not take them too seriously as they can be manipulated) and search this forum for any negative or positive comments . They are all safe with up to £85K compensation if they went bust . However some seem to have better  customer service/slicker  systems.
I have just transferred my NW loyalty isa to a fixed rate isa with Aldermore. It took about 5 mins to open it on line and apply for transfer of the NW ISA.

I did just the same the day I received the Nationwide letter but transferred to Charter savings.
have you heard anything from Nationwide yet, they normally make contact to check the transfer is genuine.
Perhaps Easter will delay things.

Ljc80_2

Thanks for the suggestions.
Looking at the Aldermore site, it states "You have 14 calendar days from account opening to make as many deposits as you like. After this period no further deposits are permitted"

Does this mean i cant keep saving into it all year? 

Basically i want to transfer my existing ISA pot of 60k from the last few years, then keep adding to it through the year with my 2020-21 allowance

colsten

Ljc80_2 said:

Does this mean i cant keep saving into it all year? 

Yes it does. This is the norm with fixed term accounts - you either get just 1 deposit, or any number of deposits in a given window, rarely longer than 2-3 weeks.

Someone claims that KRBS allow you to make any number of deposits, without any time limit. May be you want to check with them.

You do not have to keep all your ISA money in the same ISA. For example, you can deposit your 2020-21 allowance into one completely new ISA.

Albermarle

Ljc80_2 said:

Thanks for the suggestions.
Looking at the Aldermore site, it states "You have 14 calendar days from account opening to make as many deposits as you like. After this period no further deposits are permitted"

Does this mean i cant keep saving into it all year? 

Basically i want to transfer my existing ISA pot of 60k from the last few years, then keep adding to it through the year with my 2020-21 allowance

If you go for a fixed rate savings account/ISA, then it is normal that you have a short period only to invest as the fixed rate is not available indefinitely. So you will find all fixed rate accounts have similar restrictions.
If you want to add during the year then you need to have a variable rate account . In the current climate any variable rate account you pick will probably reduce their interest rates over the next few months.
You could open a new fixed rate isa with a new provider with a sum of new money , request transfer of N/wide ISA and then save during the next 12 months in a non ISA variable rate savings account. If you are a basic rate taxpayer you can earn up to £1000 in interest , outside an ISA without paying tax on it.