Savings - Stick (at around 2%) or twist (at around 4%)?

justwantedtosay

cricidmuslibale said:

justwantedtosay said:

It's one of those questions that can only be answered in hindsight. I recently rushed into a 1 year fix at 2.7% which seemed wonderful after all these years of 0.5% but am already regretting it.t.

I wonder if that was the same 1 year fix I rushed into c.3 months ago (a Coventry Building Society Loyalty Bond Issue 3) which I also thought wonderful at the time but now rather wish I hadn't been seduced into putting money into! 

Yes, it was. At least it's only one year. 

My worry at the moment is that whoever is chancellor next week will do away with tax breaks on savings income. I get why fixed rate ISAs pay less than regular accounts but the difference can be as much as 2% now so it's impossible to justify locking cash into an ISA.

refluxer

justwantedtosay said:

My worry at the moment is that whoever is chancellor next week will do away with tax breaks on savings income. I get why fixed rate ISAs pay less than regular accounts but the difference can be as much as 2% now so it's impossible to justify locking cash into an ISA.

When did you last check the best-buy tables ? I don't think you'll find any type of ISA currently paying 2% less than it's non-ISA equivalent at the moment. While fixed rate ISAs are still paying less, up until Santander launched their eSaver this week (and a few other banks followed suit), the best easy access ISAs had caught up and were actually paying similar rates to the best non-ISA easy access accounts.

In general, while steering clear of ISAs is often the better option for anyone who wants the best rates and is nowhere near their PSA - for anyone paying 20% tax (or more) on their savings interest and especially for those looking to fix, ISAs are currently the better option and easy to justify. For example - the best 1 year fixed rate at the moment is 4.55% (or 3.64% after 20% tax) and the best 1 year fixed rate ISA is paying 3.85%. Many are also taking advantage of the ability to switch to a better rate which you can do with a fixed rate ISA but not with a normal fixed rate savings account.

If you're on a reasonable wage, have savings tucked away and worried that they might do away with the PSA altogether, then that's even more reason not to dismiss ISAs.

justwantedtosay

refluxer said:

justwantedtosay said:

My worry at the moment is that whoever is chancellor next week will do away with tax breaks on savings income. I get why fixed rate ISAs pay less than regular accounts but the difference can be as much as 2% now so it's impossible to justify locking cash into an ISA.

When did you last check the best-buy tables ? I don't think you'll find any type of ISA currently paying 2% less than it's non-ISA equivalent at the moment. While fixed rate ISAs are still paying less, up until Santander launched their eSaver this week (and a few other banks followed suit), the best easy access ISAs had caught up and were actually paying similar rates to the best non-ISA easy access accounts.

In general, while steering clear of ISAs is often the better option for anyone who wants the best rates and is nowhere near their PSA - for anyone paying 20% tax (or more) on their savings interest and especially for those looking to fix, ISAs are currently the better option and easy to justify. For example - the best 1 year fixed rate at the moment is 4.55% (or 3.64% after 20% tax) and the best 1 year fixed rate ISA is paying 3.85%. Many are also taking advantage of the ability to switch to a better rate which you can do with a fixed rate ISA but not with a normal fixed rate savings account.

If you're on a reasonable wage, have savings tucked away and worried that they might do away with the PSA altogether, then that's even more reason not to dismiss ISAs.

If that's what I wrote, then that's what my building society was offering at the time.

Zerforax

Thread a bit dated now but next Bank of England meeting is very soon and markets expecting around 0.75% increase (at least an increase in the range of 0.5-1.0%)

justwantedtosay

Zerforax said:

Thread a bit dated now but next Bank of England meeting is very soon and markets expecting around 0.75% increase (at least an increase in the range of 0.5-1.0%)

Fixed rate accounts now being offered are taking that rise and another in December into account already, so don't expect to see better fixes next week. Variable rate accounts should go up, but probably by less than the expected 0.75% base rate rise.  I'm hoping Premium Bonds rates will rise again too; I think NS&I should react to a 75bp rise, even if not by the full amount, as they're getting left behind other savings rates. Probably not until the January draw though, after another base rate rise in December. You never know, I might actually 'win' something!

Mrnkar_2

Hi, Sorry just wanted to ask. I have a NSandI account with some premium bonds. I also have just opened a savings account with them and put some money in it but not sure how things work. 
Do they use it to give me more premium bonds or is it just a savings account. Thank you

Albermarle

Mrnkar_2 said:

Hi, Sorry just wanted to ask. I have a NSandI account with some premium bonds. I also have just opened a savings account with them and put some money in it but not sure how things work. 
Do they use it to give me more premium bonds or is it just a savings account. Thank you

The savings account is separate. If you want more Premium Bonds you have to buy them.

Mrnkar_2

Thank you.

justwantedtosay

Mrnkar_2 said:

Hi, Sorry just wanted to ask. I have a NSandI account with some premium bonds. I also have just opened a savings account with them and put some money in it but not sure how things work. 
Do they use it to give me more premium bonds or is it just a savings account. Thank you

It's as Albermarle said. I didn't want to appear to ignore you when you asked me a direct question but there's really nothing to add. Good luck with your Premium Bonds.