Early Transfer of Fixed Rate Cash ISAs. Sensible?

abarthman

I've been reviewing my wife and I's cash ISAs and note that we have a few fixed-rate ISAs with low interest rates (eg, 1.2% and 2.1%).  We are obviously locked into these for a while yet, but, given the number of cash ISAs with much better interest rates around at the moment, I am thinking about ending these early and transferring the funds to a cash ISA that pays a decent rate of interest.

Obviously, we are going to take a hit in terms of lost interest (120 days for Coventry, I think) but 120 days at 1.2% will soon be offset with an ISA that pays 5% plus.

If I had £50,000 invested at 1.2%. That's £600 interest per annum.   120 days' interest is approximately one third of a year or 0.4%, so I would lose £200 interest.  £50,000 at 5% is £2,500 per annum.

Am I missing anything obvious here or is this the sensible way to go?

sheslookinhot

There is a calculator somewhere on this website to validate your assumption. It seems the way to go.

Get a move on as there is not many providers with 5% rates.

When was your last “review” ? Rates have been greater than 5% for a good while.

slinger2

Unless you're very near the end of the fixed term it's pretty certain that a transfer to "a cash ISA that pays a decent rate of interest" would be a good option.

ColdIron

Sometimes it can be a hard decision, especially with rates tending downwards, but those two rates are so poor that transferring is a no brainer

Virgin are offering 5.05% presently

https://moneyfactscompare.co.uk/isa/fixed-rate-isas/?quick-links-first=false

Albermarle

1.2% and 2 % is very low, so most probably worthwhile transferring, assuming that there is still a while to run on them. However double check first the interest penalty period.

I've been reviewing my wife and I's cash ISAs and note that we have a few fixed-rate ISAs with low interest rates (eg, 1.2% and 2.1%).  

I would politely suggest you check more regularly in future, as rates have been more around 5% for some time now.

friolento

This is the calculator mentioned https://www.moneysavingexpert.com/savings/isa-switch-calc/