Barclays 2 year flexible cash ISA - 4.10% Sense check

howryoo

Hindsight's a wonderful thing!

Too late now, but looking at some figures and some quick calcs, I think I would have been better

off if I was top of things a few months ago!  Juts like to see if I'm on the right track ... sense-checking.

With the Barclays 2yr ISA paying 4.10% opened back in Jan 2023 with approx £47500, it'd be 8 months in to Sep 2023 when an 18 month ISA was paying around 5.80% became available.

The Barclays ISA had a 180 days penalty, so I'd have only earned around £338 after this for the first 8 months. If I then opened an 18 month ISA, I make it around £600 better off for an identical period (albeit having 2 more months at the end) than if I left it as is (paying 4.10%)?

Does this sound about right?

Reed_Richards

My rough calculation was £590 better off but I made some minor approximations so I agree with "around £600".

Your only hope to redeem the situation is that there will be some great rate deal on offer when your two year fixed rate ISA comes to an end that won't be around two months later.  Who knows?  You need both hindsight and foresight to be sure you make the right choices.

surreysaver

So, you'd have had 14 months remaining on your 4.1% ISA?

The way I would look at it is, if you left the £47.5k where it was 14 months would earn about £2,272

Moving it to 5.8% would earn about £3,214 over 14 months (plus you'd have an extra 4 months at 5.8% after that, but that depends upon interest rates at the time as to whether that's better or not)

So, a difference of £942.  I have assumed you would have transferred your ISA in September when it still had 14 months remaining.

180 days interest would cost about £960.  So I reckon you'd have been slightly worse off moving your money.

I did similar, but my lower paying fixed rate ISA had a penalty of only 30 days interest, so was well worth it 

You also need to consider that you'd have tying your money up for a couple of months longer, and so what the penalty was for releasing your money in the new ISA

Having said that, you may find an ISA paying over 6% in the near future and it may have been worth keeping it where it is!

howryoo

surreysaver said:

So, you'd have had 14 months remaining on your 4.1% ISA?

The way I would look at it is, if you left the £47.5k where it was 14 months would earn about £2,272

Moving it to 5.8% would earn about £3,214 over 14 months (plus you'd have an extra 4 months at 5.8% after that, but that depends upon interest rates at the time as to whether that's better or not)

So, a difference of £942.  I have assumed you would have transferred your ISA in September when it still had 14 months remaining.

180 days interest would cost about £960.  So I reckon you'd have been slightly worse off moving your money.

I did similar, but my lower paying fixed rate ISA had a penalty of only 30 days interest, so was well worth it 

You also need to consider that you'd have tying your money up for a couple of months longer, and so what the penalty was for releasing your money in the new ISA

Having said that, you may find an ISA paying over 6% in the near future and it may have been worth keeping it where it is!

Thanks @surreysaver, but with my calculations, I have worked out how much interest has accrued to date and deducted the amount penalised from that before adding back to initial amount (as this'll be the amount within the wrapper that will be transferred into higher interest paying ISA account).

I've also assumed interest paid annually; I'm sure someone will correct me if my methodology is wrong.

BTW - 16 months remaining

howryoo

I assume that it's no point doing now with the current rates 5.20% - 5.30%?

refluxer

howryoo said:

I assume that it's no point doing now with the current rates 5.20% - 5.30%?

There's no sense in dwelling on what might have been - it's all part of the gamble you take with fixed rate accounts.

Stick your current figures and dates into the MSE 'ditch and switch' calculator to work out whether it's better to switch now...

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

surreysaver

howryoo said:

surreysaver said:

So, you'd have had 14 months remaining on your 4.1% ISA?

The way I would look at it is, if you left the £47.5k where it was 14 months would earn about £2,272

Moving it to 5.8% would earn about £3,214 over 14 months (plus you'd have an extra 4 months at 5.8% after that, but that depends upon interest rates at the time as to whether that's better or not)

So, a difference of £942.  I have assumed you would have transferred your ISA in September when it still had 14 months remaining.

180 days interest would cost about £960.  So I reckon you'd have been slightly worse off moving your money.

I did similar, but my lower paying fixed rate ISA had a penalty of only 30 days interest, so was well worth it 

You also need to consider that you'd have tying your money up for a couple of months longer, and so what the penalty was for releasing your money in the new ISA

Having said that, you may find an ISA paying over 6% in the near future and it may have been worth keeping it where it is!

Thanks @surreysaver, but with my calculations, I have worked out how much interest has accrued to date and deducted the amount penalised from that before adding back to initial amount (as this'll be the amount within the wrapper that will be transferred into higher interest paying ISA account).

I've also assumed interest paid annually; I'm sure someone will correct me if my methodology is wrong.

BTW - 16 months remaining

I'll try again with 16 months:-

Remaining with existing for 16 months £2,596
Going with new for 16 months £3,673

A difference of £1,077
Minus £960
Equals better off by about £117

Which is (very) approximately what the MSE calculator gives linked to above gives 

I haven't included the extra £338 in my calculation, but that would make it a little bit better by about six quid (the difference between 5.8% and 4.1%)

How have you worked out £600?

Albermarle

I worked it out based on transferring in December, i.e now.
It would give an approx loss of £100  overall by transferring.

surreysaver

Albermarle said:

I worked it out based on transferring in December, i.e now.
It would give an approx loss of £100  overall by transferring.

I think the poster was thinking retrospectively - i.e. they would have transferred in September. I reckon they would have been about £100 better off. Obviously the less time remaining on the ISA, the less better off they are transferring 

howryoo

surreysaver said:

howryoo said:

surreysaver said:

So, you'd have had 14 months remaining on your 4.1% ISA?

The way I would look at it is, if you left the £47.5k where it was 14 months would earn about £2,272

Moving it to 5.8% would earn about £3,214 over 14 months (plus you'd have an extra 4 months at 5.8% after that, but that depends upon interest rates at the time as to whether that's better or not)

So, a difference of £942.  I have assumed you would have transferred your ISA in September when it still had 14 months remaining.

180 days interest would cost about £960.  So I reckon you'd have been slightly worse off moving your money.

I did similar, but my lower paying fixed rate ISA had a penalty of only 30 days interest, so was well worth it 

You also need to consider that you'd have tying your money up for a couple of months longer, and so what the penalty was for releasing your money in the new ISA

Having said that, you may find an ISA paying over 6% in the near future and it may have been worth keeping it where it is!

Thanks @surreysaver, but with my calculations, I have worked out how much interest has accrued to date and deducted the amount penalised from that before adding back to initial amount (as this'll be the amount within the wrapper that will be transferred into higher interest paying ISA account).

I've also assumed interest paid annually; I'm sure someone will correct me if my methodology is wrong.

BTW - 16 months remaining

I'll try again with 16 months:-

Remaining with existing for 16 months £2,596
Going with new for 16 months £3,673

A difference of £1,077
Minus £960
Equals better off by about £117

Which is (very) approximately what the MSE calculator gives linked to above gives 

I haven't included the extra £338 in my calculation, but that would make it a little bit better by about six quid (the difference between 5.8% and 4.1%)

How have you worked out £600?

Having reviewed my calcs, I also worked out would have been better off by ~£115.

That £600 figure was incorrect, as included the 2 months at the end of the 18 month term, so not comparing like with like.  Those 2 months came to ~£490.

But when the original 2yr 4.1% term came to an end and assuming easy access rates were around 3.5%, being on that 5.80% would have been further better off by just under £200 - so around £300 overall.

I appreciate what @refluxer says, in that there's no point dwelling on what could have been, but just trying to gauge if I'm on the right track with my thinking.  I was looking a few months back as that was when it peaked, but of course we never knew that (plus I was off the ball).