Cash ISA Easy access - Does the rate actually increase ?

c_smith

Expotter said:

I know it's a bit of a faff and perhaps not very logical, but it's hardly a problem when you can easily and pretty much instantly transfer to the latest issue. It really only takes a couple of minutes.

Defeats the purpose of a "variable rate" account though, and means you're constantly having to check if they've upped their rates, because they never inform you that a new issue account is available.  They're taking advantage of people and the FCA should be looking into this. 

Mr_K

etwallace said:

I'm familiar with fixed rate ISA's but unfamiliar with easy access cash Isa's. I have a strong suspicion that an EA cash ISA that is an 'Issue' ISA, which most of them are, will not see an increase to its rate even though rates are predicted to continue increasing. All EA cash Isa t&c's state the rate may increase or decrease but in practice once an EA Isa is opened I think the rate is likely to be frozen, even though it's not a fixed rate Isa. Has anyone in the last year opened an EA cash Isa, maybe with an 'issue' number, and seen the rate increase in line with the bank rate or has it stayed at the rate it was when first opened? Thanks 

It increases if you get an Index linked cash isa, that goes up with the base rate.  Skipton had one had the beginning of the year, i quickly opened one when I saw the way things were going.  Very soon after they closed it to new customers.  

The beauty of an instant access ISA is that you can move if isn't competitive, and also get to the money if needed.   I wouldn't touch anything fixed rate at the moment unless it was >5%, and not for longer than a year. 

Albermarle

c_smith said:

Expotter said:

I know it's a bit of a faff and perhaps not very logical, but it's hardly a problem when you can easily and pretty much instantly transfer to the latest issue. It really only takes a couple of minutes.

Defeats the purpose of a "variable rate" account though, and means you're constantly having to check if they've upped their rates, because they never inform you that a new issue account is available.  They're taking advantage of people and the FCA should be looking into this. 

You could move to an easy access ISA, with a provider who automatically increase the rates and no need to change to a new issue. Unfortunately, I do not have a list (I know Ford Money do this but they have recently just pulled the account for new customers) but I could guess that the rates on these accounts will not be the very best ones. 

Expotter

c_smith said:

Expotter said:

I know it's a bit of a faff and perhaps not very logical, but it's hardly a problem when you can easily and pretty much instantly transfer to the latest issue. It really only takes a couple of minutes.

Defeats the purpose of a "variable rate" account though, and means you're constantly having to check if they've upped their rates, because they never inform you that a new issue account is available.  They're taking advantage of people and the FCA should be looking into this. 

Some banks do increase their variable rates, but a lot of them follow the same model as mobile, TV, broadband contracts, insurance, how the energy market used to work and lots of others. If you don't actively go and look for the newest best deals you're stuck on old contracts paying more. The upside is that if it wasn't for the fact that a lot of people don't do it for whatever reason, we'd all end up paying the same, especially if companies were forced to charge everyone the same, it would unavoidable cost more for those of us who swap regularly, because companies will always protect their profit margins. 
Exactly the same applies to banks and the interest rates they pay, so the way I see it, you just have to make it work to your advantage and make the most of new offers. Does it require extra effort? Yes, but it pays off.

womble12345

c_smith said:

The_Unready said:

Cynergy Bank appear to do this as well.

I invested in an Issue 22 variable rate cash ISA at the start of the financial year, went to check the rate on it yesterday and noticed it was the same as when I took it out.

However, Cynergy were advertising cash ISAs at 0.6 percentage points higher than that via Issue 25.

My rate wasn't automatically increased, and I had to apply for the new issue/rate and close the old ISA down via their website. I presume I'll have to carry out the same process if/when a new rate/issue is available! What a faff!

Obviously it's on me to check the rates and terms, but I wonder how many people lose out by mistakenly assuming like me that the rate will increase automatically?

Cynergy Bank are at it, hence the reason I've just applied to move my "variable rate" ISA that never varies, to a 1 year fixed rate ISA with Virgin at 3.5%.  I left Virgin to go to Cynergy in May, but since then I've had to change issue number twice as they never pass on the increased rates to the old issues.  They're basically treating variable rate accounts as fixed rate accounts.  These banks shouldn't be allowed to get away with this.  

I have just noticed myself that my Cynergy ISA is paying 0.76% and new accounts pay 1.65%.
How did you go about changing your Cynergy ISA to a newer version? There isnt a button on my account summary to allow me to upgrade?

womble12345

Against my better judgement I switched to a newer Cynergy ISA and see that I will probably have to do that every few months, I was tempted to move to Ford Money as they have their 'best rate guarantee' but I thought that would be more admin. Maybe next time.....

refluxer

womble12345 said:

Against my better judgement I switched to a newer Cynergy ISA and see that I will probably have to do that every few months

I hate to say it but as Cynergy's Easy Access ISA isn't currently available to new customers, I would imagine it'll relaunch soon with a higher rate and you may be forced to switch again !

At least it's a relatively easy option though but, by choosing the easy option, you've lost out quite a bit on rate - 1.65% with Cynergy compared with 1.90% with Paragon for example. Unlike Cynergy (and others), Paragon do have a history of passing on rate rises to existing accounts, at least for a certain time (around 6 months or so in my experience with the Paragon Triple Access Cash ISA that I hold). There are no guarantees of course, but it's worth bearing in mind the next time you're looking at transferring.

womble12345 said:

I was tempted to move to Ford Money as they have their 'best rate guarantee' but I thought that would be more admin. Maybe next time.....

With Ford Money's fixed rate accounts, their 'best rate guarantee' guarantees you'll get a higher rate if they increase the rate in-between you applying for the account and funding it. I'm not sure how it works with the Flexible ISA, but it's possible it may not work the way you think. I used to have a number of fixed rate accounts with Ford Money but, with the exception of their Flexible Saver maybe, they aren't as competitive as they used to be.

The_Unready

I'm sure it's been listed elsewhere on this site, but for any followers of this thread please be aware that Cynergy Bank Online ISA issue 26 is now available, paying 2.15%.

I've just had to go through the rigmarole (again) of closing my issue 25 ISA and moving it into the issue 26. That's the last time I'll be doing it though - I'll be transferring it out as soon as it's complete! I just CBA with it anymore!

Albermarle

With Ford Money's fixed rate accounts, their 'best rate guarantee' guarantees you'll get a higher rate if they increase the rate in-between you applying for the account and funding it. I'm not sure how it works with the Flexible ISA

From Ford Money website.

Enjoy our best available rate, even after you’ve opened your account. On variable rate products you’ll always enjoy the same rates as our new customers on like-for-like products. Where this means your interest rate will decrease, we’ll let you know at least 30 days before the change.

refluxer

Albermarle said:

With Ford Money's fixed rate accounts, their 'best rate guarantee' guarantees you'll get a higher rate if they increase the rate in-between you applying for the account and funding it. I'm not sure how it works with the Flexible ISA

From Ford Money website.

Enjoy our best available rate, even after you’ve opened your account. On variable rate products you’ll always enjoy the same rates as our new customers on like-for-like products. Where this means your interest rate will decrease, we’ll let you know at least 30 days before the change.

Cheers - good to know that they apply rate rises to existing Flexible Cash ISA accounts, rather than releasing new issues. Their flexible ISA rate is increasing to 1.9% this week but it's just a shame that even that rate isn't quite up there with the best.