Wait for BOE Interest rates before opening fixed ISA

jflundy

Thinking of opening a fixed interest ISA 1 year with virgin 3.02%

Should I wait to here if the rates rise and if so how long does it takes the banks to increase theirs?

Many thanks

MK62

As you only have 2 days to wait for the BOE decision, and that decision will almost certainly be a rate rise, then I'd probably hang on a week or two........if, as expected, the base rate is raised, then there's a reasonable chance (but no guarantee) that a better deal will  materialise in that time......

george4064

In the meantime, make sure you stick your cash in the best Easy Access savings account, such as Al Rayan.

https://moneyfacts.co.uk/savings-accounts/easy-access-savings-accounts/#?quick-links-first=false

refluxer

With the BoE meeting so close, I would hang on. Virgin have already been beaten into second place and it's likely that 3.02% will look on the low side in a few weeks as the banks fight for that number one spot at the top of the table. 

A._Badger

A fixed term cash ISA I hold with a building society is due to mature on 29th September. If I wait until the BOE announcement and any subsequent offers of better rates from providers, how close to that maturity date can I get to instigate a transfer? I suspect that the BS in question is not one of the ones that handles online transfers. 

refluxer

A._Badger said:

A fixed term cash ISA I hold with a building society is due to mature on 29th September. If I wait until the BOE announcement and any subsequent offers of better rates from providers, how close to that maturity date can I get to instigate a transfer? I suspect that the BS in question is not one of the ones that handles online transfers. 

The first thing you need to check is what the default option at maturity is - the option that they choose if they don't hear from you. In my experience, this is usually some kind of 'maturity' easy access ISA, but you would need to check your T&Cs or maturity letter to confirm.

If it does default to an easy access ISA from which you can make a penalty-free transfer at a later stage, then this at least gives you some breathing space and time to think about what to do next.

Transfers can take anything from a few days to many weeks (and occasionally months in some cases !) so as it gets closer and closer to the maturity date, it becomes tricky to get the timings right. Because of this, I tend to let mine default to the easy access/maturity option and take it from there. With interest rates rising as they have been, there will usually be a higher rate just round the corner - you just need to make sure your money doesn't sit there for too long.

Transferring into an Easy Access ISA with the same or a different provider is another option if you're thinking about holding out for higher rates, as these usually pay much higher rates than their 'maturity' equivalents.

A._Badger

refluxer said:

A._Badger said:

A fixed term cash ISA I hold with a building society is due to mature on 29th September. If I wait until the BOE announcement and any subsequent offers of better rates from providers, how close to that maturity date can I get to instigate a transfer? I suspect that the BS in question is not one of the ones that handles online transfers. 

The first thing you need to check is what the default option at maturity is - the option that they choose if they don't hear from you. In my experience, this is usually some kind of 'maturity' easy access ISA, but you would need to check your T&Cs or maturity letter to confirm.

If it does default to an easy access ISA from which you can make a penalty-free transfer at a later stage, then this at least gives you some breathing space and time to think about what to do next.

Transfers can take anything from a few days to many weeks (and occasionally months in some cases !) so as it gets closer and closer to the maturity date, it becomes tricky to get the timings right. Because of this, I tend to let mine default to the easy access/maturity option and take it from there. With interest rates rising as they have been, there will usually be a higher rate just round the corner !  

Thank you for a quick and thorough response. I'll call them and ask. It did cross my mind that contacting me so close to the maturity date wasn't likely to be an accident, which was why I thought I would ask the experts here.

Albermarle

and if so how long does it takes the banks to increase theirs?

Firstly any bank can choose to do what it wants with the interest rate on their savings accounts, so there is never any gurantee that any particular bank will follow any Bof E rate increase up.

Secondly the rate rise is so expected that some of it at least is probably already baked in to current one year offers. The prospect of future rises ( or not) during the one year period is probably more important in setting the savings rates.

Having said all that you might as well hang on for another couple of weeks, just to see.

refluxer

A._Badger said:

Thank you for a quick and thorough response. I'll call them and ask. It did cross my mind that contacting me so close to the maturity date wasn't likely to be an accident, which was why I thought I would ask the experts here.

Have they not written to you ? Building Societies like the Principality and Nationwide usually send you a letter a good few weeks before the maturity date, which should spell out your options. If you've gone paper-free, I would check your online banking document store or messages.

km1500

agree with @refluxer but would add check it is not one of those that mature into an equivalent new isa eg a new 2 year isa if you do nothing 

Kinkajou

I came here today to ask the same question and the responses here are very valuable.  I have a couple of ISAs that have matured now earning 0.50 and 0.05.  Since today ( Sep 22) BOE rate rise, I too was thinking to wait a couple of weeks.  I was thinking to transfer to an easy access ISA paying 1.25 in the short term, but that would entail a lot of faffing around.