Fixed rate ISA

ZCazH3

Hi, if you have fixed rate ISA took out 2 months ago at 2% is it better to transfer to another provider paying 4% and just take the hit on losing the penalty 120 interest?

Expotter

Yes, but because of the penalty you'll start the new ISA with less than you put in the first place.

For every £1000 (roughly), 

 you would have made in 2 months 1000 x 0.02 x 2/12 = 3.33,

 it'll cost you in penalty 1000 x 0.02 x 120/365 = 6.57

so you'll have 1000 + 3.33 - 6.57 = 996.76 to transfer to new ISA 

@4% and in the next 10 months you'll make  996.76 x 0.04 x 10/12 = 33.22, compared with the £20 you would make if you leave it at 2% for the next 10 months.

MX5huggy

How long is the 2% fix? 

ZCazH3

Current Fix is for 1 year