Cash ISA after the fixed period.

mike00_2

Hi, If I take out a cash ISA with, for example, a fix for a year. What happens to the rate of interest at the end of that period? 

Second question please, if I take out a cash ISA at a variable rate then how does the institution set that rate? Is it BoE plus or minus a percentage? 

Thanks. 

gravel_2

1) It depends on the institution. Some will dump you into a easy access ISA (normally paying an insultingly low interest rate). I believe some banks can also automatically roll you over into a new fix (likely not a decision you want a bank making for you).
2) They set it however they like. Some are "trackers" so will always relate to the BoE rate - for example -0.5% below the base rate. Others are just "variable" and can be changed however the bank wants.

mike00_2

Thanks for your reply, much appreciated. I'm guessing that that by reverting to poor rates of return the provider profits on the back of those who don't switch and also profits from those who do switch through fees!

Ocelot

They will email you before the fixed rate is up, asking you what you want to do with the maturing ISA before dumping it in a variable rate (although some default to fix or notice), fortunately.

rallycurve

mike00_2 said:

Thanks for your reply, much appreciated. I'm guessing that that by reverting to poor rates of return the provider profits on the back of those who don't switch and also profits from those who do switch through fees!

I don't know of any provider charging a fee for transferring out a cash ISA. They do charge an early closure fee for access within a fixed term though, but not on maturity or for easy access

Albermarle

mike00_2 said:

Thanks for your reply, much appreciated. I'm guessing that that by reverting to poor rates of return the provider profits on the back of those who don't switch and also profits from those who do switch through fees!

Three to four weeks before the end of the fix, you will be contacted by the provider, with a list of options. It is advisable to make a choice rather than letting it just go to a default option ( unless you are happy with the default option of course).