Bizarre ISA Allowance Question

AP3

eskbanker said:

AP3 said:

eskbanker said:

SadieO said:

AP3 said:

Thanks folks, that looks like it!

PRAISETHESUN the reason I took Monthly is so I could stick the interest paid into a different account, where it could also earn interest.

So essentially I'm earning extra interest, on the ISA interest, and then it seems I can pay the ISA interest back into the ISA and keep the extra interest!

That was a lot of "Interest"'s

But it will carry on earning compound interest if left in the ISA, won't it? 

Yes, and the monthly interest rate will be calibrated to be lower to reflect that, i.e. if leaving the interest in the account to compound, the overall interest earned will be the same as if it had been paid annually, rather than this being some cunning money-making wheeze to earn something extra!

OP - if you look at the summary box for the product, you should see an AER figure, plus two gross rates, one for annual interest (should be same as AER) and one for monthly (lower than AER)....

Here's the current version of the product. Same rate for both: https://www.barclays.co.uk/premier-banking/1-year-flexible-cash-isa/

I'd forgotten the point that you mentioned at the start about how monthly interest had to be paid out rather than left in the account to compound!

Having said that, if it's a flexible ISA with no deposit restrictions throughout the term, the monthly interest can just be returned straight into the ISA to compound, thereby exceeding the stated AER....

That does seem to be the case. After I topped up the ISA, the monthly interest I'm getting paid has increased.

It looks like a bizarre loophole for turning an annual compounding product into a monthly compounding product, thus boosting, and exceeding the reported, AER. I'm amazed that Barclays confirmed this is OK to do, and wish I'd noticed earlier!

Money_Grabber13579

AP3 said:

eskbanker said:

AP3 said:

eskbanker said:

SadieO said:

AP3 said:

Thanks folks, that looks like it!

PRAISETHESUN the reason I took Monthly is so I could stick the interest paid into a different account, where it could also earn interest.

So essentially I'm earning extra interest, on the ISA interest, and then it seems I can pay the ISA interest back into the ISA and keep the extra interest!

That was a lot of "Interest"'s

But it will carry on earning compound interest if left in the ISA, won't it? 

Yes, and the monthly interest rate will be calibrated to be lower to reflect that, i.e. if leaving the interest in the account to compound, the overall interest earned will be the same as if it had been paid annually, rather than this being some cunning money-making wheeze to earn something extra!

OP - if you look at the summary box for the product, you should see an AER figure, plus two gross rates, one for annual interest (should be same as AER) and one for monthly (lower than AER)....

Here's the current version of the product. Same rate for both: https://www.barclays.co.uk/premier-banking/1-year-flexible-cash-isa/

I'd forgotten the point that you mentioned at the start about how monthly interest had to be paid out rather than left in the account to compound!

Having said that, if it's a flexible ISA with no deposit restrictions throughout the term, the monthly interest can just be returned straight into the ISA to compound, thereby exceeding the stated AER....

That does seem to be the case. After I topped up the ISA, the monthly interest I'm getting paid has increased.

It looks like a bizarre loophole for turning an annual compounding product into a monthly compounding product, thus boosting, and exceeding the reported, AER. I'm amazed that Barclays confirmed this is OK to do, and wish I'd noticed earlier!

Although, despite what Barclays have said verbally, they have a statement on that page which seems to contradict it:

Monthly interest can't be paid back into this ISA or directly into any other ISA or bond.

jimjames

Money_Grabber13579 said:

AP3 said:

eskbanker said:

AP3 said:

eskbanker said:

SadieO said:

AP3 said:

Thanks folks, that looks like it!

PRAISETHESUN the reason I took Monthly is so I could stick the interest paid into a different account, where it could also earn interest.

So essentially I'm earning extra interest, on the ISA interest, and then it seems I can pay the ISA interest back into the ISA and keep the extra interest!

That was a lot of "Interest"'s

But it will carry on earning compound interest if left in the ISA, won't it? 

Yes, and the monthly interest rate will be calibrated to be lower to reflect that, i.e. if leaving the interest in the account to compound, the overall interest earned will be the same as if it had been paid annually, rather than this being some cunning money-making wheeze to earn something extra!

OP - if you look at the summary box for the product, you should see an AER figure, plus two gross rates, one for annual interest (should be same as AER) and one for monthly (lower than AER)....

Here's the current version of the product. Same rate for both: https://www.barclays.co.uk/premier-banking/1-year-flexible-cash-isa/

I'd forgotten the point that you mentioned at the start about how monthly interest had to be paid out rather than left in the account to compound!

Having said that, if it's a flexible ISA with no deposit restrictions throughout the term, the monthly interest can just be returned straight into the ISA to compound, thereby exceeding the stated AER....

That does seem to be the case. After I topped up the ISA, the monthly interest I'm getting paid has increased.

It looks like a bizarre loophole for turning an annual compounding product into a monthly compounding product, thus boosting, and exceeding the reported, AER. I'm amazed that Barclays confirmed this is OK to do, and wish I'd noticed earlier!

Although, despite what Barclays have said verbally, they have a statement on that page which seems to contradict it:

Monthly interest can't be paid back into this ISA or directly into any other ISA or bond.

That statement is clearly nonsense. Barclays might be able to control what happens with their own ISA but they can't tell anyone that they're unable to use another ISA elsewhere.

wmb194

jimjames said:

Money_Grabber13579 said:

AP3 said:

eskbanker said:

AP3 said:

eskbanker said:

SadieO said:

AP3 said:

Thanks folks, that looks like it!

PRAISETHESUN the reason I took Monthly is so I could stick the interest paid into a different account, where it could also earn interest.

So essentially I'm earning extra interest, on the ISA interest, and then it seems I can pay the ISA interest back into the ISA and keep the extra interest!

That was a lot of "Interest"'s

But it will carry on earning compound interest if left in the ISA, won't it? 

Yes, and the monthly interest rate will be calibrated to be lower to reflect that, i.e. if leaving the interest in the account to compound, the overall interest earned will be the same as if it had been paid annually, rather than this being some cunning money-making wheeze to earn something extra!

OP - if you look at the summary box for the product, you should see an AER figure, plus two gross rates, one for annual interest (should be same as AER) and one for monthly (lower than AER)....

Here's the current version of the product. Same rate for both: https://www.barclays.co.uk/premier-banking/1-year-flexible-cash-isa/

I'd forgotten the point that you mentioned at the start about how monthly interest had to be paid out rather than left in the account to compound!

Having said that, if it's a flexible ISA with no deposit restrictions throughout the term, the monthly interest can just be returned straight into the ISA to compound, thereby exceeding the stated AER....

That does seem to be the case. After I topped up the ISA, the monthly interest I'm getting paid has increased.

It looks like a bizarre loophole for turning an annual compounding product into a monthly compounding product, thus boosting, and exceeding the reported, AER. I'm amazed that Barclays confirmed this is OK to do, and wish I'd noticed earlier!

Although, despite what Barclays have said verbally, they have a statement on that page which seems to contradict it:

Monthly interest can't be paid back into this ISA or directly into any other ISA or bond.

That statement is clearly nonsense. Barclays might be able to control what happens with their own ISA but they can't tell anyone that they're unable to use another ISA elsewhere.

The context is Barclays, though. The full quote in the summary is, "Monthly interest can't be paid back into this ISA or directly into any other ISA or bond. It can be paid into an account with us in your name, or held jointly with someone else, or we'll send it to you by cheque."

https://www.barclays.co.uk/premier-banking/1-year-flexible-cash-isa/

AP3

wmb194

Per their terms here: https://www.barclays.co.uk/content/dam/documents/premier/flexible_cash_isa.pdf

"If you take money out of your Flexible Cash ISA, you can put it back within the same tax year without it counting towards your ISA allowance. This includes interest paid to you during the term of your account"

wmb194

AP3 said:

wmb194

Per their terms here: https://www.barclays.co.uk/content/dam/documents/premier/flexible_cash_isa.pdf

"If you take money out of your Flexible Cash ISA, you can put it back within the same tax year without it counting towards your ISA allowance. This includes interest paid to you during the term of your account"

Yes, of course. I’m referring to having the interest paid away and the idea that it cannot then be deposited to an ISA. Of course it can.

eskbanker

wmb194 said:
The full quote in the summary is, "Monthly interest can't be paid back into this ISA or directly into any other ISA or bond. It can be paid into an account with us in your name, or held jointly with someone else, or we'll send it to you by cheque."

Seems an unnecessarily cumbersome form of wording if what they really mean is that monthly interest can only be paid to a non-ISA Barclays account (on which the ISA holder is named) or by cheque - why would they feel the need to expressly exclude other types of account held elsewhere?

jimjames

wmb194 said:

jimjames said:

Money_Grabber13579 said:

AP3 said:

eskbanker said:

AP3 said:

eskbanker said:

SadieO said:

AP3 said:

Thanks folks, that looks like it!

PRAISETHESUN the reason I took Monthly is so I could stick the interest paid into a different account, where it could also earn interest.

So essentially I'm earning extra interest, on the ISA interest, and then it seems I can pay the ISA interest back into the ISA and keep the extra interest!

That was a lot of "Interest"'s

But it will carry on earning compound interest if left in the ISA, won't it? 

Yes, and the monthly interest rate will be calibrated to be lower to reflect that, i.e. if leaving the interest in the account to compound, the overall interest earned will be the same as if it had been paid annually, rather than this being some cunning money-making wheeze to earn something extra!

OP - if you look at the summary box for the product, you should see an AER figure, plus two gross rates, one for annual interest (should be same as AER) and one for monthly (lower than AER)....

Here's the current version of the product. Same rate for both: https://www.barclays.co.uk/premier-banking/1-year-flexible-cash-isa/

I'd forgotten the point that you mentioned at the start about how monthly interest had to be paid out rather than left in the account to compound!

Having said that, if it's a flexible ISA with no deposit restrictions throughout the term, the monthly interest can just be returned straight into the ISA to compound, thereby exceeding the stated AER....

That does seem to be the case. After I topped up the ISA, the monthly interest I'm getting paid has increased.

It looks like a bizarre loophole for turning an annual compounding product into a monthly compounding product, thus boosting, and exceeding the reported, AER. I'm amazed that Barclays confirmed this is OK to do, and wish I'd noticed earlier!

Although, despite what Barclays have said verbally, they have a statement on that page which seems to contradict it:

Monthly interest can't be paid back into this ISA or directly into any other ISA or bond.

That statement is clearly nonsense. Barclays might be able to control what happens with their own ISA but they can't tell anyone that they're unable to use another ISA elsewhere.

The context is Barclays, though. The full quote in the summary is, "Monthly interest can't be paid back into this ISA or directly into any other ISA or bond. It can be paid into an account with us in your name, or held jointly with someone else, or we'll send it to you by cheque."

https://www.barclays.co.uk/premier-banking/1-year-flexible-cash-isa/

That would seem to be completely at odds with the other Barclays link provided by AP3 that specifically says interest can be paid back in.

eskbanker

I'm just guessing here but wonder if they were intending to convey that it isn't possible to nominate monthly interest payments to be added directly to the ISA balance (which should really be expressed as 'paid' rather than 'paid back'), without trying to assert that it can't be (re)deposited after being paid out to an external account?

wmb194

eskbanker said:

I'm just guessing here but wonder if they were intending to convey that it isn't possible to nominate monthly interest payments to be added directly to the ISA balance (which should really be expressed as 'paid' rather than 'paid back'), without trying to assert that it can't be (re)deposited after being paid out to an external account?

Yes, this is my interpretation and it fits with the OP writing, "This account offered to either pay me the interest into the ISA at maturity, or pay the interest monthly into another account."