Confusion between Cash ISA Base Rate Tracker and Cash ISA saver

galastur

Hello,

I am trying to figure out these two accounts

CASH ISA BASE RATE TRACKER -- 4.25% tax-free/AER variable
CASH ISA SAVER -- 3.05% tax-free pa/AER variable

Both accounts will

- allow transfers IN,
- allow flexible access to the money without affecting theISA allowance

I can only see one 'real' difference, and that is the difference on the %, what am I missing? In what sort of scenario will be more benefitial to go with the 'Cash ISA saver' rather than the 'Cash ISA Base Rate Tracker'?

If you know what i am missing, please shout!

Kim_13

The Tracker version only tracks at the Base Rate - 0.25% for 1 year, whereas the Cash ISA saver is a permanent account. I haven’t checked what happens when the year runs out, but suspect it would transfer into a Cash ISA Saver or other similar account available at that time so you aren’t really losing by going for the Tracker, only gaining.

Parent has a non-ISA Tracker paying interest monthly, and opened a Bonus Saver paying annually as it was paying less than 20% less than the Tracker (having realised they would be paying tax on savings in 24/25.) Following February’s base rate change, it was also cut by 0.25%. Providers are usually slow to increase rates but quick to cut them (and some cut by more than the cut.) In short, the Cash ISA Saver doesn’t protect you from a cut but a Tracker ensures you get a fair deal. 

I would have said open both, the Cash ISA Saver with £1 as Skipton allow more than one ISA with them, but their Skipton to Skipton ISA transfer process means you can only transfer the full balance - so would lose the other as a backup at the point it became advantageous to transfer from one to the other. Unless you transfer all but £1 out of a lower paying Skipton ISA to another ISA provider and then back into the higher paying Skipton ISA - but that’s a faff if you actually need to use it. 

Cash ISA Savers are pretty much always available, whereas Trackers don’t remain on sale for long. I haven’t seen a non-ISA version since last Summer.

galastur

I do not see any reason at all as to why someone will go for the CASH ISA SAVER, rather than the tracker ....

I thought it might be like a marketing strategy? but then to what purpose? My guess is that seeing the 'tracker' will put off some people, so not sure... Anyways, thanks for looking into it and the extra info that i did not know !!! (i could open more than one ISA? i though we were only allow to open 1 per year, but will have to check that! cheers).

Kim_13

galastur said:

I do not see any reason at all as to why someone will go for the CASH ISA SAVER, rather than the tracker ....

I thought it might be like a marketing strategy? but then to what purpose? My guess is that seeing the 'tracker' will put off some people, so not sure... Anyways, thanks for looking into it and the extra info that i did not know !!! (i could open more than one ISA? i though we were only allow to open 1 per year, but will have to check that! cheers).

It was 1 of each type per tax year up until this tax year. New rules mean that you can now open and pay into Cash ISAs with as many providers as you wish, subject to not exceeding the £20,000 limit across all ISAs that you contribute to in 24/25. Including the Skipton Tracker, I am on 3 current year Cash ISAs and providers cannot stop this. Providers may only stipulate that you can only pay current year money into one cash ISA with them - some do (eg. Coventry) and some don’t (Skipton.)

I suspect they are not receiving any applications for the Cash ISA Saver at the present time, but that it just stays there as people will want it when there is no Tracker on sale. Skipton are very easy to get open and funded (all online, debit card accepted) so may be useful to those wanting to get funds in last minute in three weeks time before what remains of 24/25’s ISA allowance is lost.

galastur

Many thanks @Kim_13 ...I wasn't aware that they had removed the limit.