Barclays 1 year flexible fixed rate ISA

JohnnyMc3000

Went to open this today after having opened and funded a current account to do so.

But one question I can't get past is "what account do you want the interest paid to?" and the only possibility they give is the current account.

The whole reason I'm wanting to use the ISA is that I'm already going to be over my Personal Savings Allowance.

If they pay the £800 interest from my £20k to the current account and not to the ISA, I'm no better off and there's been no tax benefit at all, no? I.e. the £20k may as well have not been in an ISA ...

Am I missing something?

pecunianonolet

JohnnyMc3000 said:

Went to open this today after having opened and funded a current account to do so.

But one question I can't get past is "what account do you want the interest paid to?" and the only possibility they give is the current account.

The whole reason I'm wanting to use the ISA is that I'm already going to be over my Personal Savings Allowance.

If they pay the £800 interest from my £20k to the current account and not to the ISA, I'm no better off and there's been no tax benefit at all, no? I.e. the £20k may as well have not been in an ISA ...

Am I missing something?

You have to select annual interest to get it paid back into the ISA. If you took monthly, it can only be paid away.

eskbanker

JohnnyMc3000 said:

Am I missing something?

https://www.barclays.co.uk/savings/isas/1-year-flexible-cash-isa/ highlights that you can keep interest within the ISA if choosing end-of-term payment rather than monthly:

End-of-term interest is compounded annually and added to the funds deposited in your ISA when it matures.

Monthly interest can't be paid back into this ISA or directly into any other ISA or bond. It can be paid into a Barclays account in your name or held jointly with someone else, or we'll send it to you by cheque.

JohnnyMc3000 said:

If they pay the £800 interest from my £20k to the current account and not to the ISA, I'm no better off and there's been no tax benefit at all, no? I.e. the £20k may as well have not been in an ISA ...

If the £800 is earned within the ISA and paid out to a current account, it's not taxable income.

Ocelot

If you open the 2 year version, can you really put in another 20k in the 2nd year (2024/25) at the same interest rate? Seems unlikely.

AlwaysLearnin

Ocelot said:

If you open the 2 year version, can you really put in another 20k in the 2nd year (2024/25) at the same interest rate? Seems unlikely.

From the "Full product details" document:

"Payments into the account • Deposits up to the annual ISA subscription limit* each tax year may be made throughout the term of the Flexible Cash ISA."

25_Years_On

susanann_2 said:

Am confused with their monthly interest vs annually. They quote 4% for both on the 1yr fix surely monthly should be less.

The figure they quote is the AER - Annual Equivalent Rate and these will be the same whether it's monthly or yearly. Monthly interest is paid at a slightly lower rate so that with compounding you end up at 4% over the year.

pecunianonolet

25_Years_On said:

susanann_2 said:

Am confused with their monthly interest vs annually. They quote 4% for both on the 1yr fix surely monthly should be less.

The figure they quote is the AER - Annual Equivalent Rate and these will be the same whether it's monthly or yearly. Monthly interest is paid at a slightly lower rate so that with compounding you end up at 4% over the year.

Monthly interest can only be paid away so if you want to keep the interest in the ISA you have to select annual. 

Rusty190

Ocelot said:

If you open the 2 year version, can you really put in another 20k in the 2nd year (2024/25) at the same interest rate? Seems unlikely.

I opened the 2 year version, in branch, last week and asked this question.
I was assured by the woman dealing with me that, yes, that was the case.

Rony

Can someone please explain why this product is too good to be true? I'm quite new to this and I currently have Virgin Money Cash ISA at 3%.

I thought that you can transfer your cash isas to any other cash isas and it wouldn't use up your allowance. Why is this one special? 

You can put £20k in in April 2023, but isn't that the same with all other cash isas? It's the new tax year so you are able to open up new cash isa/use existing one to add another £20k to?

Can someone elaborate why this is so good!

Thanks!

refluxer

Rony said:

Can someone please explain why this product is too good to be true? I'm quite new to this and I currently have Virgin Money Cash ISA at 3%.

I thought that you can transfer your cash isas to any other cash isas and it wouldn't use up your allowance. Why is this one special? 

You can put £20k in in April 2023, but isn't that the same with all other cash isas? It's the new tax year so you are able to open up new cash isa/use existing one to add another £20k to?

Can someone elaborate why this is so good!

Thanks!

I wouldn't go as far as to say it's too good to be true, but it's definitely an attractive proposition for a few reasons.

You're free to pay into an Easy Access Cash ISA whenever you like (subject to the £20k/tax year ISA allowance), but this Barclays Flexible ISA has a fixed rate which means it has more in common with a Fixed Rate Cash ISA.

For Fixed Rate ISAs though, you normally only have a limited time (eg. 30 days) to pay in money or transfer another ISA into them, after which no more can be added, whereas this Barclays Flexible Cash ISA says ""Deposits up to the annual ISA subscription limit* each tax year may be made throughout the term of the Flexible Cash ISA." which means you can make further payments into it just like you can an Easy Access ISA - it's just not quite as flexible as a conventional (flexible) Easy Access ISA due to only allowing 3 withdrawals (up to 10% of the total saved each time) per year. But for those who don't need regular access to the money, that won't be an issue.

For anyone looking for a 1 Year Fixed Rate Cash ISA right now then it seems like a no-brainer to me (if you don't think fixed rates are going to rise, at least), but I'm already a Barclays customer so wouldn't have the application issues that many new customers are having when trying to open one.