Multiple cash ISA 1,2,3,4,5 year fixed

Jason79

I have just opened multiple cash ISAs with Zopa an easy access at 5.08% 1 year fixed, 2 year, 3,4 and 5 year fixed all at various interest rates between 4-5%. 

Not seen any advice on this but why can’t I see anyone advising open a 5 year fixed and not deposit any money just in case the interest rate drops over the next few year then you are guaranteed to have that 4% rate for how ever many years you have left? I presume this is legal as long as I stick to the £20000 a year, any advice or confirmation this is ok to do would be appreciated. My plan is stick it in the easy access to start with then transfer it no one of my fixed isas when that rate becomes higher than the easy access.

gravel_2

You should look at the product terms to understand why this makes no sense.

n3ophyte

Jason79 said:

Not seen any advice on this but why can’t I see anyone advising open a 5 year fixed ISA and not deposit any money just in case the interest rate drops over the next few year then you are guaranteed to have that 4% rate for how ever many years you have left?

Because you usually have a short window of around 14 days from opening a fixed rate ISA to put money in it. They close if you leave it any longer.

Dazed_and_C0nfused

Jason79 said:

I have just opened multiple cash ISAs with Zopa an easy access at 5.08% 1 year fixed, 2 year, 3,4 and 5 year fixed all at various interest rates between 4-5%. 

Not seen any advice on this but why can’t I see anyone advising open a 5 year fixed and not deposit any money just in case the interest rate drops over the next few year then you are guaranteed to have that 4% rate for how ever many years you have left? I presume this is legal as long as I stick to the £20000 a year, any advice or confirmation this is ok to do would be appreciated. My plan is stick it in the easy access to start with then transfer it no one of my fixed isas when that rate becomes higher than the easy access.

Isn't this going to cause you some problems 🤔

https://www.zopa.com/help/article/how-long-do-i-have-to-fund-a-fixed-term-isa-pot

Jason79

So I have 30 days to fund each isa. I can transfer £5 to each fixed isa from the flexi isa then they are good I think or am I missing something?

Dazed_and_C0nfused

Jason79 said:

So I have 30 days to fund each isa. I can transfer £5 to each fixed isa from the flexi isa then they are good I think or am I missing something?

That would be fine. 

But an ISA with £5 in it for 5 years isn't going to make you reach, even if it's a cracking interest rate.

Jason79

The idea hopefully is not to use the 5 year one but if interest rates drop in 3 or 4 years back to the low levels they have been before the recent increases in the last couple of years then this would be the only time to use the 5 year fix, if rates stay the same I have a fiver stuck in it for 5 years which isn’t an issue. Surprised nobody is advising to do this that’s why I’m asking in here to see what I am missing

gravel_2

Jason79 said:

The idea hopefully is not to use the 5 year one but if interest rates drop in 3 or 4 years back to the low levels they have been before the recent increases in the last couple of years then this would be the only time to use the 5 year fix, if rates stay the same I have a fiver stuck in it for 5 years which isn’t an issue. Surprised nobody is advising to do this that’s why I’m asking in here to see what I am missing

The part where it says:
"Once this funding window has ended, you won't be able to add any more money to your pot." 

Jason79

Thanks Gravel that’s the comment I was looking for. Thanks everyone for the responses thought this couldn’t be right

friolento

You should also understand what happens if you want to transfer out your easy access ISAs. It appears you can only do this if you also transfer out your fixed term ISAs, which will come with a penalty for early termination.

Unless you are certain that you won’t want to transfer out in the next 5 years, it might be best not to fund the fixed term ones and just let them get closed

ZeroSum

friolento said:

You should also understand what happens if you want to transfer out your easy access ISAs. It appears you can only do this if you also transfer out your fixed term ISAs, which will come with a penalty for early termination.

Unless you are certain that you won’t want to transfer out in the next 5 years, it might be best not to fund the fixed term ones and just let them get closed

That's possibly out of date info, as can now do partial transfers, where previously (ie before this week) any isa transfers had to be the full value of isa within that banks isa umbrella