Switching ISA

2010

I have a 4yr fixed ISA until 31-5-24 paying 1.4%.
If I "close" it and transfer to a 1yr fix at 2.5% I will have to forfeit 180 days interest.
Amount involved £50k, seems worth doing to me.
Any comments appreciated.

refluxer

2010 said:

I have a 4yr fixed ISA until 31-5-24 paying 1.4%.
If I "close" it and transfer to a 1yr fix at 2.5% I will have to forfeit 180 days interest.
Amount involved £50k, seems worth doing to me.
Any comments appreciated.

Here are a few rough calculations made using this online interest calculator, presuming that you have interest paid into the account and not paid away...

£50k @ 1.4% in the original 4-year Fixed Rate ISA opened on 01/06/20 will be worth £52,262 this time next year (24/08/23)

Your ISA is worth £51,562 today (24/08/22) and the 180 day penalty (on that amount) would be £356 so the amount to be transferred would be £51,206

£51,206 @ 2.5% on a 1 year fix from tomorrow (25/08/22) until 24/08/23 would grow to £52,486 so you would be £224 better off this time next year by switching and if you're able to fix at a rate >2.5% this time next year, then you will obviously be even better off on 31/05/24 than had you left it in the original 4 year ISA @1.4%.

Obviously these are only rough and ready calculations and there are a few unknowns (such as the potential for a bit of lost interest during a prolonged/problematic transfer process) but none that should affect the figures dramatically I think - do they agree with your own ?

2010

@ refluxer
thanks for a rapid and helpful reply.

refluxer

2010 said:

@ refluxer
thanks for a rapid and helpful reply.

No worries - that's how I would try and get my head around it, but do make sure you do your own calculations and make sure they tally. Hopefully if I've made any fundamental mistakes or oversights, then someone will chip in !

2010

Thanks again.
Obviously when I fixed it was the best I could get at the time.
Now everything`s gone haywire it seems the best get-out.