1 year v multi year fixed rates

dwhl

Hello,

Just wanted to clarify…

I note that 1 year fixed rate cash ISAs are now at 5.7% and 2 years is now 5.9%. Is this 5.9% each year rather than over the 2 year period? 

Thanks
David

Doctor_Who

dwhl said:

Hello,

Just wanted to clarify…

I note that 1 year fixed rate cash ISAs are now at 5.7% and 2 years is now 5.9%. Is this 5.9% each year rather than over the 2 year period? 

Thanks
David

Yes, each year.

Stargunner

dwhl said:

Hello,

Just wanted to clarify…

I note that 1 year fixed rate cash ISAs are now at 5.7% and 2 years is now 5.9%. Is this 5.9% each year rather than over the 2 year period? 

Thanks
David

The A in AER stands for annual 

nottsphil

dwhl said:

Hello,

Just wanted to clarify…

I note that 1 year fixed rate cash ISAs are now at 5.7% and 2 years is now 5.9%. Is this 5.9% each year rather than over the 2 year period? 

Thanks
David

Interest rates for savings are almost always quoted per annum, the Latin word for year. Even if it's only a six month term.
The only exception I can think of is the Government's Help to Save regular saver, which is 25% over the term.

randm

i had the same question, but going on from the o.p as both of the fixed isas have a 90 day penalty, does that mean that i take the interest earned at 5.9% for one year( of the 2 yr fix option), to work out what the 90 day penalty would cost? i am trying to understand which of the 2 is the best to go for.

Doctor_Who

randm said:

i had the same question, but going on from the o.p as both of the fixed isas have a 90 day penalty, does that mean that i take the interest earned at 5.9% for one year( of the 2 yr fix option), to work out what the 90 day penalty would cost? i am trying to understand which of the 2 is the best to go for.

The penalty would be 90/365*5.9% multiplied by the amount in the fixed rate ISA. Normally a 2 year fix has a bigger penalty than a 1 year fix, so check the T&Cs carefully. The link below is for the MSE ISA calculator. You can use it to determine whether switching a fixed rate ISA and paying a fee is worth it:

https://www.moneysavingexpert.com/savings/isa-switch-calc/

dwhl

Many thanks all