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Switching from current Shawbrook Bank 1 Year to their 2 Year fixed rate Cash ISA
SickGroove
Posts: 305 Forumite
So, I'm currently on the since withdrawn 3.90% (3.83% monthly) 1 Year fixed rate Cash ISA with Shawbrook Bank.
I transferred to them from Paragon Bank and have already used my 20K allowance for 2022/2023
I've currently got around 79K in the account and with rates possibly dropping now/by next October, I'm considering switching to their 2 year fix at 3.95% as I think they are currently not charging any penalties to do so atm.
I would opt for the monthly interest to be compounded and applied to my current Cash ISA balance (as I want to see the balance grow) then when it gets just below the 85K in around 22 months, switch the interest payments to my nominated account.
I appreciate the rate is not the best atm for 2 year fixed rate Cash ISA but as there will be no penalties as I'm already with them, seems the best option.
Any advice or suggestions would be most appreciated as I don't want to get a year down the line and the rates have dramatically fallen below the current 3.95%
I know we haven't got a crystal ball re rates but this this might be a good option for me
Thanks in advance.
I transferred to them from Paragon Bank and have already used my 20K allowance for 2022/2023
I've currently got around 79K in the account and with rates possibly dropping now/by next October, I'm considering switching to their 2 year fix at 3.95% as I think they are currently not charging any penalties to do so atm.
I would opt for the monthly interest to be compounded and applied to my current Cash ISA balance (as I want to see the balance grow) then when it gets just below the 85K in around 22 months, switch the interest payments to my nominated account.
I appreciate the rate is not the best atm for 2 year fixed rate Cash ISA but as there will be no penalties as I'm already with them, seems the best option.
Any advice or suggestions would be most appreciated as I don't want to get a year down the line and the rates have dramatically fallen below the current 3.95%
I know we haven't got a crystal ball re rates but this this might be a good option for me
Thanks in advance.
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Comments
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It's very much finger in the air time re interest rates in the near to medium term future. They may have peaked or may be about to peak but we don't really know. It's personal choice as to fixed rates. For what it's worth I have transferred to two ISAs one for 2 years to Virgin Money and one for 3 years to Gatehouse Bank. As for changing from monthly interest compounded to monthly interest paid away, you will have to check whether the account allows a change. I know some do not and once you have chosen your interest method that is it for the term. You may have checked already.2
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SickGroove said:So, I'm currently on the since withdrawn 3.90% (3.83% monthly) 1 Year fixed rate Cash ISA with Shawbrook Bank.
I transferred to them from Paragon Bank and have already used my 20K allowance for 2022/2023
I've currently got around 79K in the account and with rates possibly dropping now/by next October, I'm considering switching to their 2 year fix at 3.95% as I think they are currently not charging any penalties to do so atm.
You'll definitely need confirmation from Shawbrook before switching because you're only looking at a £40 PA increase by moving £79k from 3.90% to 3.95%, so you don't want to be paying any penalties as this could leave you worse off.SickGroove said:I would opt for the monthly interest to be compounded and applied to my current Cash ISA balance (as I want to see the balance grow) then when it gets just below the 85K in around 22 months, switch the interest payments to my nominated account.SickGroove said:I appreciate the rate is not the best atm for 2 year fixed rate Cash ISA but as there will be no penalties as I'm already with them, seems the best option.SickGroove said:Any advice or suggestions would be most appreciated as I don't want to get a year down the line and the rates have dramatically fallen below the current 3.95%
I know we haven't got a crystal ball re rates but this this might be a good option for me
In past years I've mainly taken out 1 or 2-year ISA fixes but, FWIW, I did transfer a couple of Easy Access Cash ISAs into 2-year fixes last week for similar reasons to yourself, although mine were at considerably higher rates than the one you're looking at (4.50% for a maturing Nationwide ISA and 4.38% with Charter). The difference in my case though was that I'd been holding out for a while in an obviously-lower-paying Easy Access account (with no transfer penalties), whereas you've already fixed at a decent rate.
One bit of advice I can give is to consider not continually paying into the same ISA year after year and possibly splitting the one you have into smaller, more manageable chunks. Keeping ISAs from different tax years separate gives you so such more flexibility (especially when taken out at different times of the year and for different durations) and allows you to take advantage of the best rate at the time, rather than having all your eggs in one basket. Doing this also obviously avoids any FSCS limit issues. This approach does require more management though, so it does depend how much effort you want to put in.2 -
Appreciate the replies and suggestions...
As I'm at 79K in my current Cash ISA, I just want to get it close to the 85K limit with the monthly interest paid being applied to the 79K balance...so remaining with Shawbrook on a 2 year at 3.95% would achieve it....that's my thinking anyway.
However, as suggested, I will be putting a fresh 20K into a new Cash ISA next April, so it then creates a 6 month ladder with my Shawbrook one...obviously only applicable if I remain on my current one year fix.
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Interesting... I've recently done the opposite - moving from a 5-year (4.27%) to a 1-year (3.80%) with the same provider within the 14 days cooling-off period. And I did this with 2 providers. My reasoning was that the BoE's interest rate projection was much higher for 2023Q4 than the current 3%. Of course no-one knows what will happen to interest rates in future or how closely ISA rates will follow them.0
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AnuMew said:Interesting... I've recently done the opposite - moving from a 5-year (4.27%) to a 1-year (3.80%) with the same provider within the 14 days cooling-off period. And I did this with 2 providers. My reasoning was that the BoE's interest rate projection was much higher for 2023Q4 than the current 3%. Of course no-one knows what will happen to interest rates in future or how closely ISA rates will follow them.0
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