Annoyed

bdb47

Forgive me not really a question but a bit of a rant.

Need to have a cash ISA for tax reasons, previous 3 year deal ended about 3 weeks ago but waited with the anticipated bank rate rise. Bank rate did rise by .75% but up to now ISA rates have remained within 0.1% where they previously were with the highest rate for 1yr at 3.95%. Ironically you can now get 4.5% for a 1yr normal savings account but after tax that is a mere 3.6%.

If a bank can offer 4.5 for a normal savings account why should it be less for anISA.

Dazed_and_C0nfused

There are cash ISA's paying more than 4.5%.

What is the preferred term?

eskbanker

bdb47 said:

If a bank can offer 4.5 for a normal savings account why should it be less for anISA.

Because there is an administrative overhead associated with complying with ISA regulations - it's nothing new though, so the same situation would have arisen when you were taking out the fixed term one that's now maturing....

masonic

Aside from the administrative overheads. Fixed term ISAs must permit access at any time, so the proceeds cannot be used as profitably than a real fixed term savings account where money must be committed for the full term.

dunstonh

Normal fixed term deposits truly tie people in.  No access until x date.  ISAs cannot do that.  So, you are never going to get as good a return on an ISA as you can on an FTD.

qsk

dunstonh said:

Normal fixed term deposits truly tie people in.  No access until x date.  ISAs cannot do that.  So, you are never going to get as good a return on an ISA as you can on an FTD.

Ah, I didn't realize that. Does this mean fixed rate cash ISA is actually instant-accessible?  

dunstonh

qsk said:

dunstonh said:

Normal fixed term deposits truly tie people in.  No access until x date.  ISAs cannot do that.  So, you are never going to get as good a return on an ISA as you can on an FTD.

Ah, I didn't realize that. Does this mean fixed rate cash ISA is actually instant-accessible?  

Usually a loss of interest for x number of days.  And more often than not, the access means the full amount.  Not partial.  i.e. if you had £10,000 in a fixed rate ISA then you choice is zero or £10,000.

Albermarle

qsk said:

dunstonh said:

Normal fixed term deposits truly tie people in.  No access until x date.  ISAs cannot do that.  So, you are never going to get as good a return on an ISA as you can on an FTD.

Ah, I didn't realize that. Does this mean fixed rate cash ISA is actually instant-accessible?  

Yes I suppose they are, but there will always be a penalty for taking the money out before the term ends.
Typically 90 days interest for a one year fixed term, going up in steps to a penalty of one years interest for 5 years, although you need to check each providers T's & C's