Fixed term ISA maturing - to transfer to fixed term or easy access with better rate?

sammy_zammy

Hi all,

I was hoping someone could kindly provide a little guidance. I have a Santander fixed rate ISA maturing soon, with a 5.6% interest rate.

It seems Santander have one of the highest fixed rate ISAs on the market now, at 4.63%.

I also have a Trading 212 5% easy access ISA, and a MoneyBox 5.16% triple access ISA (although that includes a bonus that I'll I'll lose in May). So I would get better rates from these - but of course, these are variable.

So I think I have 3 options:

1. Opening the fixed term Santander and transferring on maturity to guarantee the rate.

2. Transfer to one of the higher variable rate easy access accounts and risk the rate dropping and making it a worse deal. (The amount by which it can safely drop depending on how long it stays at the higher rate!)

3. Option 2, and if the easy access account drops lower, hoping but not guaranteeing there's a good fixed term account to transfer again too - which would also come with the added bonus of the term ending later.

So I guess my question is - in your experience - how risky is options 2 and 3? I realise that it’s unusual having easy access with better rates than fixed term - but don’t know if I’m just getting FOMO about the Santander fixed term!

Thanks so much

Mark_d

I wouldn't describe 2 or 3 as risky. Your capital is safe.

In terms of making the most interest over the next year, no-one can predict if and how the variable interest rates will change.  Personally I would go for the best rate now, whether that be fixed or variable. But that's just my preference.

eskbanker

sammy_zammy said:

I realise that it’s unusual having easy access with better rates than fixed term

The obvious conclusion being that the market expects rates to fall....

sammy_zammy

Mark_d said:

I wouldn't describe 2 or 3 as risky. Your capital is safe.

In terms of making the most interest over the next year, no-one can predict if and how the variable interest rates will change.  Personally I would go for the best rate now, whether that be fixed or variable. But that's just my preference.

Thanks, that makes sense! I think that’s what I was leaning towards - and if it turns out not to be the case, then it’s very easy to switch. It’s not like rates are all suddenly going to tank, and the difference between the fixed term and easy access is quite significant.

eskbanker said:

sammy_zammy said:

I realise that it’s unusual having easy access with better rates than fixed term

The obvious conclusion being that the market expects rates to fall....

Excellent point. I suppose I should look at fixed rates being lower as a forecast of what will happen to easy access too, rather than just “the way it is nowadays”. So it makes sense to go with whatever has the best rates now, with the bonus of being easy access, and then switch when that’s no longer the best rate available. I was overthinking it.

slinger2

I would think that if you're thinking of a 1-year fix, there's probably not much to choose between them. The fix might do slightly better but you'll have to pay a penalty should you want the money early.

The bigger savings decisions relate to longer fixes (eg 3 or 5 years). I'm 1 year into a 3-year fix at 6% (non-ISA) and wondering why I didn't put more in. Everything's easy in hindsight.

moneysavinggirl40

sammy_zammy said:

Hi all,

I was hoping someone could kindly provide a little guidance. I have a Santander fixed rate ISA maturing soon, with a 5.6% interest rate.

It seems Santander have one of the highest fixed rate ISAs on the market now, at 4.63%.

I also have a Trading 212 5% easy access ISA, and a MoneyBox 5.16% triple access ISA (although that includes a bonus that I'll I'll lose in May). So I would get better rates from these - but of course, these are variable.

So I think I have 3 options:

1. Opening the fixed term Santander and transferring on maturity to guarantee the rate.

2. Transfer to one of the higher variable rate easy access accounts and risk the rate dropping and making it a worse deal. (The amount by which it can safely drop depending on how long it stays at the higher rate!)

3. Option 2, and if the easy access account drops lower, hoping but not guaranteeing there's a good fixed term account to transfer again too - which would also come with the added bonus of the term ending later.

So I guess my question is - in your experience - how risky is options 2 and 3? I realise that it’s unusual having easy access with better rates than fixed term - but don’t know if I’m just getting FOMO about the Santander fixed term!

Thanks so much

You could transfer to Chip isa. Check out the good isa rate for newbies

slinger2

moneysavinggirl40 said:

sammy_zammy said:

Hi all,

I was hoping someone could kindly provide a little guidance. I have a Santander fixed rate ISA maturing soon, with a 5.6% interest rate.

It seems Santander have one of the highest fixed rate ISAs on the market now, at 4.63%.

I also have a Trading 212 5% easy access ISA, and a MoneyBox 5.16% triple access ISA (although that includes a bonus that I'll I'll lose in May). So I would get better rates from these - but of course, these are variable.

So I think I have 3 options:

1. Opening the fixed term Santander and transferring on maturity to guarantee the rate.

2. Transfer to one of the higher variable rate easy access accounts and risk the rate dropping and making it a worse deal. (The amount by which it can safely drop depending on how long it stays at the higher rate!)

3. Option 2, and if the easy access account drops lower, hoping but not guaranteeing there's a good fixed term account to transfer again too - which would also come with the added bonus of the term ending later.

So I guess my question is - in your experience - how risky is options 2 and 3? I realise that it’s unusual having easy access with better rates than fixed term - but don’t know if I’m just getting FOMO about the Santander fixed term!

Thanks so much

You could transfer to Chip isa. Check out the good isa rate for newbies

Of course, the Chip ISA is a variable rate tracker, so goes down immediately when the base rate falls. At least with other variable rate ISAs you get some notice of a rate reduction.