Advice on 3-5yr fixed term ISAs

Bea787

Hi all, I am looking to transfer my existing ISAs and am keen to maximise interest. I have looked at rates on MSE and it seems the best options are to fix for 5 years. I don't mind not having access. I'm seeking advice as to whether its wise in the current financial climate to go for a 5 yr fix or less. I have googled and it seems that the BoE rates are likely to decrease over the next 5 years so it seems a smart move. Am I missing anything? I'm no expert in these matters so would welcome thoughts on the best way to make the most of existing ISAs and adding to the same.

If folk have experience of Castle Trust or Close Brothers (top rates for fixes) I'd welcome that too.

Thanks in advance.

El_Torro

Interest rates will probably reduce in March, maybe a bit more before the end of the year. After that, who knows? It's all guesswork really, especially if you're looking 5 years out.

If you're willing to tie your money up for 5 years then a Stocks & Shares ISA might be of interest. 5 years is a bit short for investing but if you're flexible on when you can cash in your investments they should prove more lucrative than any interest made in cash.

If you do want to save rather than invest then as I understand it (might be wrong) most if not all Cash ISAs allow you to take cash out before the fixed term ends. Generally with a penalty of a few months worth of interest. Losing out on interest isn't great but at least the option exists.

eskbanker

I'm seeking advice as to whether its wise in the current financial climate to go for a 5 yr fix or less. I have googled and it seems that the BoE rates are likely to decrease over the next 5 years so it seems a smart move. Am I missing anything?

You're perhaps missing the fact that any forecasts you can see will also be available (together with much more) to the institutions offering fixed rates, so don't be under any illusion that you can outwit them with a bit of basic research, unless they get it wrong of course….

Albermarle

There are two issues at play at the same time.

1. Normally you get a better interest rate for tying up your money for a longer period, all other things being equal.

2 ) The provider ( and the customer) are trying to second guess/predict interest rate movements in the market in future, based on current knowledge.

wmb194

https://forums.moneysavingexpert.com/discussion/6656689/advice-on-3-5yr-fixed-term-isas

Albeit with, usually, an interest penalty, fixed rate Isas are always accessible so if the market's rates move against you a long way you'll still be able to change your mind.