Variable or Fixed Rate ISA....that is the question

Kriminal

Hi All,

I have a Zopa 1 year Fixed ISA coming to an end this month, so was shopping around for current interest rates, and best ideas.

At the moment, variable ISAs are proving to be paying more, but could have the interest rate go up or down through the year
Fixed rate ISAs are paying less, but it is Fixed at that rate

For example, on a Zopa Smart ISA Saver, the variable rate is 4.80%.  The 1 year Fixed on a Smart Saver ISA is 4.40%

With approximately £30k, of which £22k will be transferred from the previous ISA, what would be your decisions?

Thanks in advance

Albermarle

Normally fixed term/fixed rate accounts pay better than variable rate accounts, as your money is tied up.
So the fact that now the one year fix is lower is a strong indication that the variable rate will drop over the next 12 months.
Market predictions are for a 1 to 1.5% drop by the ned of next year, but it could be more or less.
It is kind of gamble that only you can decide.

El_Torro

50% in easy access and 50% in a 1 year fixed rate perhaps? 

Middle_of_the_Road

At the moment I am keeping to an easy access ISA. Fixed rate ISA rates are currently lower due to the likelihood that the base rate will be reduced moving forward.

Therefore I feel that as available rates on easy access accounts fall, available fixed rate accounts will be affected to a lesser extent. That could be the time to consider moving to a fixed rate.

If you do go for easy access, you can do much better than Zopa. Moneybox are currently offering 5.15%

wiseonesomeofthetime

18 months ago, I locked in to Santander's 18-month ISA fixed at 4.25%

Rates went up, so I effectively lost out as there never seemed to be a "sweet spot" for me to push me to pay the penalty and move funds.

Without a crystal ball, it's pure guesswork, in my experience/

Ayr_Rage

Trading 212 at 5.15%

Instant access and fully flexible.

Kriminal

Thank you for all the responses, and suggestions/recommendations.  It really is a crystal ball situation

Are Trading 212 a simple straightforward type ISA, as they come across to me as more of an investment platform (from my naive point of view, maybe?)

If I was to fully invest the money to the Variable (Trading 212 or Moneybox), and the rates dropped significantly, would I still be able to chop and change this money through ISAs over the next year?

winkowinko

I fixed for 1 year almost 4 months ago at 4.91% thinking that the 5.2% variable that Trading 212 was offering at the time would drop well below 4.91% within the space of a year. It may still do, but I am surprised that it's still offering close to what it was.
Has certainly got me thinking about what I should do come April when I can open a new ISA.

eskbanker

Kriminal said:

Are Trading 212 a simple straightforward type ISA, as they come across to me as more of an investment platform (from my naive point of view, maybe?)

Their background is investment but they've branched out into cash ISAs more recently.

Kriminal said:

If I was to fully invest the money to the Variable (Trading 212 or Moneybox), and the rates dropped significantly, would I still be able to chop and change this money through ISAs over the next year?

Yes, although obviously if the general market direction is downwards then there's no guarantee there'd be anything better available.

Kriminal

It's looking like I'll probably do the transfer from Zopa end of the month, and invest fully in the Trading 212 ISA, as looking at what winkowinko as posted as well has got me thinking it could be worth the gamble, but keeping an eye on the rates over that year to get an idea on where/how things are moving.

Thanks again for your opinions - all opinions welcome 

twopenny

One mistake I made post covid and with the rules popping around compared to the past - I fixed the bulk with Santandar for 2yrs thinking rates would drop. And that's ok

What I didn't check was I don't get the interest for 2yrs..........there was no way to view the account or what it was making so I could plan accordingly.

In the past the interest has always been paid annually regardless of fix term. I just assumed and you know what that makes you

I still have some in a variable account which still has a rate higher, the gamble didn't go my way.