MSE ISA swap calculator

bird_2112

Hi, I was going to post this a few weeks ago so treat the interest rate as an example. My partner and I used the ISA swap calculator recently and she ended up swapping her ISA. I didn't really agree with the result it gave but agreed it was better to swap. Just got around to looking at the calculator again just out of interest for my ISA and based on a £95k balance swapping from 3.7% to 5.54% it gives this..

£292 worse off leaving the fixed cash ISA

If you move to the new proposed 5.54% rate.

How we worked this out...

Interest in new account over 2 months	£874
Penalty to withdraw from your old ISA	- £580
Interest in old ISA over 2 months	- £587
Amount you're worse off by	= £292

I can't see why it has the old ISA interest of £587 deducted as well as the penalty. I would look at it another way being that for 2 months (ok 60 days) you would only get 1.84% interest (as your reclaiming the penalty). Any thoughts ? thanks

refluxer

The calculator is comparing how much better or worse off you'll be on the day the old ISA would have matured, so it'll earn £874 if you switch or £587 if you don't, meaning that you'll be £287 better off if you were to switch but once the penalty is deducted, that'll actually leave you worse off.

Doctor_Who

bird_2112 said:

Hi, I was going to post this a few weeks ago so treat the interest rate as an example. My partner and I used the ISA swap calculator recently and she ended up swapping her ISA. I didn't really agree with the result it gave but agreed it was better to swap. Just got around to looking at the calculator again just out of interest for my ISA and based on a £95k balance swapping from 3.7% to 5.54% it gives this..

£292 worse off leaving the fixed cash ISA

If you move to the new proposed 5.54% rate.

How we worked this out...

Interest in new account over 2 months	£874
Penalty to withdraw from your old ISA	- £580
Interest in old ISA over 2 months	- £587
Amount you're worse off by	= £292

I can't see why it has the old ISA interest of £587 deducted as well as the penalty. I would look at it another way being that for 2 months (ok 60 days) you would only get 1.84% interest (as your reclaiming the penalty). Any thoughts ? thanks

If you switch to the new ISA you won't earn the ~2 months' interest on the old ISA, hence the £587 is a 'deduction' from the total you could possibly earn in the remaining 2 months. By staying put you earn £587 in interest. If you switch you'll earn £874 interest, pay a £580 fee and lose £587 interest. Better to wait 2 months until the ISA matures and hope rates are similar.

bird_2112

Thanks for the replies. Jotting the figures down I can see the reason for the loss now. Yes I am waiting until late September when I can transfer it and have fingers crossed that there maybe a 6% Cash ISA available !