penalty

Sally1436

Hi all
I have 2 year fixed rate cash isa with Lloyds, with an interest rate of 0.20%.   It matures in June 23 and I am thinking it may be with opening a new  cash ISA with a better interest rate, and paying a penalty. 
I called Lloyds today and asked what the penalty would be...but they said they did not know, and do not provide that information.  

Looking at the T&C, its says....

• You can withdraw money from this account but you will be charged the equivalent of 180 days' tax-free interest.

Does anyone know what that would be on around 50k

I'm trying to work out if it would be better to transfer to a new isa.  Currently I can see 3.75%int.  
 
I know there are better deals out there but I'm not confident enough yet to stray away from the high st branches.

Thoughts much appreciated.  

RacingDriver

Based on the numbers provided you would expect to earn £100 in interest in a year (£50,000 x 0.20%).

180 days is just under half a year so the penalty would be around £50.

Dazed_and_C0nfused

£50,000 x 0.2% = £100

£100 / 365 days = £0.2739726/day

£0.2739726 x 180 = £49.32


£50,000 x 3.75% = £1,875/year

Sally1436

That is helpful. 
so it makes sense then. 

As if I withdraw from the lloyd 0.20% isa....penalty would be @£50

an ISA at 3.5% would be £1750 (£50,000 x 3.5%) £1750 per annum 

So for 6 months in the new isa would be (£1750 /2) £875 for 6 months

So about £800 better off.  

Is that right?  sounds like a lot.
but my maths is rubbish. 

RacingDriver

Looks right, just make sure to transfer the ISA rather than withdrawing so it does not lose the ISA status.

Sally1436

blimey that is a big difference!

And from reading on here...I can open as many new isas.....transfer as many as i like.....but must only put new money of max £20k im any one isa.  Is that right

savit4l8er

As above, it's a big penalty in terms of duration but the rate is so very poor, it doesn't matter. 😂

Sally1436

feels stupid not transfer it.
will look into it and move over the next week or so.....

You guys are awesome....I spent the best part of an hour trying to make sense from Lloyds on the phone.  and trying to figure it out from the website. 

Albermarle

I know there are better deals out there but I'm not confident enough yet to stray away from the high st branches

You need to get over this idea. For normal savings accounts, cash ISA's, High st banks should be avoided as the rates are always poor.

If you are worried about using a bank you have never heard of, then be assured that every bank in the linked list is covered by the FSCS compensation of £85K. Or if you prefer something more familiar, you can still look at institutions like Coventry Building Society that often have good, if not the very best rates.

Savings accounts: 2.75% easy access or up to 5.01% fixed (moneysavingexpert.com)

jimjames

Sally1436 said:

I know there are better deals out there but I'm not confident enough yet to stray away from the high st branches.

Even High Street accounts are paying at least 10x more than 0.2% now so definitely worth moving asap.

kungfuman

I have a question on cash isa interest penalties and thought it will be easier posting here than starting a new thread.

Looking to transfer isa into santanders 2 years fixed at 4.2% where they have an 120days penalty on withdrawal.  

Is this a penalty on the interest already accrued or essentially a fixed penalty amount so you can lose more than you put in if you decided to withdraw say in the first 120 days?