Santander ISAs - 1 year or 18 month term - what have you chosen? Plus funding?

howryoo

I'm undecided as to which term to go for.

Is it likely come Mar 2024, rates will drop?  Crystal ball I know, but have people gone for?

Also, it states that those rates are applicable for funds deposited by 1st April - what if I intend to fund the account with a transfer in?  Does anyone know.  Does Santander deem the account funded (or indeed backdate interest to?) on the date the transfer in was requested?

3card

My wife has just signed up for a Santander fixed ISA for the 18 months. 
The 4.25% was suited to her for the 18 month account but we will be keeping an eye on things

The transfer in from what i saw stated that the transfer in needs to be done within 14 days of opening the account and thats what we are also looking at

howryoo

Thanks 3card - I'm also leaning towards the 18 month option but was hoping to hear from others and intrigued to hear what their rationale was which swayed them towards one way or the other.

It seems unclear (unless I'm missed it) whether requesting a transfer in secures the rate, as Santander states the rates which applicable to deposits made by 01.04.23.  Obviously, if transferring in, funds may credit the account after 1st April.

It'd be good to hear those who've encountered this bank in October 2022, where I think Santander did something similar - that the rates applied to deposits made on or before 01.11.22.  Did they get the rate (if it was changed after 1st Nov 2022) once their transfer in credited their account after that date?

refluxer

The only reason it says that you need to deposit funds by 1st April to get the advertised AER is because the 1 year account has a fixed maturity date of 1st April 2024 (and that's the fixed point they've used to determine the AER for all the different fixes) therefore you'll receive slightly less than this if you deposit after 1st April 2023 (because the funds will have been in for less than a year), just as you would expect.

Basically, if you deposit on (say) the 2nd or 3rd April, then it'll make virtually no difference but if you were to leave it until the 30th April deadline, then you'll have lost a month so obviously would only get roughly 11/12ths of the interest you would expect from a 1 year fix at the stated rate.

3card

refluxer said:

The only reason it says that you need to deposit funds by 1st April to get the advertised AER is because the 1 year account has a fixed maturity date of 1st April 2024 (and that's the fixed point they've used to determine the AER for all the different fixes) therefore you'll receive slightly less than this if you deposit after 1st April 2023 (because the funds will have been in for less than a year), just as you would expect.

Basically, if you deposit on (say) the 2nd or 3rd April, then it'll make virtually no difference but if you were to leave it until the 30th April deadline, then you'll have lost a month so obviously would only get roughly 11/12ths of the interest you would expect from a 1 year fix at that rate.

So going by this thinking the 18 months fixed rate also starts on the 1st April?

3card

howryoo said:

Thanks 3card - I'm also leaning towards the 18 month option but was hoping to hear from others and intrigued to hear what their rationale was which swayed them towards one way or the other.

It seems unclear (unless I'm missed it) whether requesting a transfer in secures the rate, as Santander states the rates which applicable to deposits made by 01.04.23.  Obviously, if transferring in, funds may credit the account after 1st April.

It'd be good to hear those who've encountered this bank in October 2022, where I think Santander did something similar - that the rates applied to deposits made on or before 01.11.22.  Did they get the rate (if it was changed after 1st Nov 2022) once their transfer in credited their account after that date

Just to point out that to transfer into the Santander ISA you need to complete the Santander ISA transfer form. Not sure if that helps you

refluxer

3card said:

refluxer said:

The only reason it says that you need to deposit funds by 1st April to get the advertised AER is because the 1 year account has a fixed maturity date of 1st April 2024 (and that's the fixed point they've used to determine the AER for all the different fixes) therefore you'll receive slightly less than this if you deposit after 1st April 2023 (because the funds will have been in for less than a year), just as you would expect.

Basically, if you deposit on (say) the 2nd or 3rd April, then it'll make virtually no difference but if you were to leave it until the 30th April deadline, then you'll have lost a month so obviously would only get roughly 11/12ths of the interest you would expect from a 1 year fix at that rate.

So going by this thinking the 18 months fixed rate also starts on the 1st April?

It doesn't start on the 1st April as such, but the 18 month fixed rate has a fixed maturity date of 1st October 2024, so 1st April 2023 to 1st April 2024 are the dates they've used for the AER calculations (for comparison purposes).

howryoo

refluxer said:

The only reason it says that you need to deposit funds by 1st April to get the advertised AER is because the 1 year account has a fixed maturity date of 1st April 2024 (and that's the fixed point they've used to determine the AER for all the different fixes) therefore you'll receive slightly less than this if you deposit after 1st April 2023 (because the funds will have been in for less than a year), just as you would expect.

Basically, if you deposit on (say) the 2nd or 3rd April, then it'll make virtually no difference but if you were to leave it until the 30th April deadline, then you'll have lost a month so obviously would only get roughly 11/12ths of the interest you would expect from a 1 year fix at the stated rate.

That makes sense - it's clicked into place!

So even if the offer's still available on 10th April, it'll still mature 1st April / 1st October.

Wonder if they'll have loyalty ISA rates at those times seeing there's an exodus of maturing accounts?  Even if the offered something decent in April 2024, it probably won't be as much so as to recoup:

1. lost interest for the first 12 months

2. match compound interest which will be accrued on the first 12 months + interest

If I went with 12 months at 4.15%, what would interest have to be to get back to same position if I went with 18 months at 4.25% from the outset?  4.44%?

refluxer

howryoo said:

Wonder if they'll have loyalty ISA rates at those times seeing there's an exodus of maturing accounts? 

I haven't had an ISA with Santander long enough to know whether they offer special rates on maturity or not, but I don't remember seeing this mentioned on the forum. This is pretty rare though I think - not many providers do this, at least in my experience.

howryoo said:

If I went with 12 months at 4.15%, what would interest have to be to get back to same position if I went with 18 months at 4.25% from the outset?  4.44%?

Yes, that's about right so it obviously all depends on where you think rates will be in a year's time.

One thing to bear in mind is that, because interest is added annually, if you go for an 18 month fix then the actual return will be higher than the quoted 4.25% AER due to compounding. For example - if you put £20k into the 18 month ISA then you'd be starting that last 6 month period with £20k + 4.25%, so around £20,850.

As I'm considering the 18 month ISA myself, I've just done a few quick calculations (using this simple interest calculator) and I think the overall return would be around 6.46% over that 18 month period, so divided by 1.5 (years) = 4.31% for comparison purposes... or 4.47% if you transferred £20k, got the £50 eVoucher, considered it as cash and added it to the total interest earned in the same calculation

GlasgowExpat2

If I open the ISA today with £500 can I put more in up to 5 April or can you only put funds in once? 

eskbanker

GlasgowExpat2 said:

If I open the ISA today with £500 can I put more in up to 5 April or can you only put funds in once? 

Answered in product summary box under 'deposits':

The ISA allowance for the 2022/23 tax year is £20,000 and deposits can be made up to and including 5 April 2023. The ISA allowance for the 2023/24 tax year is £20,000 and deposits can be made from 6 April 2023 up to and including 30 April 2023. No further deposits will be allowed.