Are Barclay's ISA's Really worth 6.5%?

Keith601

Lokolo wrote: »

I can't help but laugh at this thread....

You can open a tax haven ISA for a year then transfer it elsewhere.

So for 08/09 have:

A 6.5% ISA with Barclays with £3600 new money.
A (for examples sake) a 6.05% with Egg for previous money.

This to me, is worth it.[But do the rules allow for opening a new ISA and transfering to a different ISa in the same year?]

Lokolo

Yes you can transfer at any time.

frivolous_fay

Sorry for the hijack but I didn't want to clog up one of the major Braclays threads.

Bit of a numpty question here and I'm sure and I'm overlooking something obvious... but the cashier in Barclays couldn't help me on this one either so perhaps it's not all that clear...

6.50% AER**/6.31% Tax free*

Why show 'Tax free' when it's an ISA? Which rate would you get?
I've read Barclays' explanation of AER and I still don't understand!

Graeme7777

Hi,

I am open to correction but I think that the 6.50% rate reflects the compounding of interest on the stated, annual rate of 6.31%.

I suspect the words "tax free" are used to reinforce the fact that interest is earned free of tax in an ISA.

Hope this is helpful.

BruceyBonus

frivolous_fay wrote: »

Sorry for the hijack but I didn't want to clog up one of the major Braclays threads.

Bit of a numpty question here and I'm sure and I'm overlooking something obvious... but the cashier in Barclays couldn't help me on this one either so perhaps it's not all that clear...

6.50% AER**/6.31% Tax free*

Why show 'Tax free' when it's an ISA? Which rate would you get?
I've read Barclays' explanation of AER and I still don't understand!

The interest is paid monthly at 6.31%. Over the year, when you work out the interest earnt on the interest already paid, it is effectively 6.50% (if the interest were paid annually).

E.g. I'll work it out on £1000:
Monthly interest at 6.31%
Balance Interest
£1,000.00 £5.26
£1,005.26 £5.29
£1,010.54 £5.31
£1,015.86 £5.34
£1,021.20 £5.37
£1,026.57 £5.40
£1,031.97 £5.43
£1,037.39 £5.45
£1,042.85 £5.48
£1,048.33 £5.51
£1,053.85 £5.54
£1,059.39 £5.57
£1,064.96

Then annual interest at 6.50%
Balance Interest
£1,000.00 £65.00
£1,065.00
You can see that it is in fact the same rate.

bristolleedsfan

frivolous_fay wrote: »

Sorry for the hijack but I didn't want to clog up one of the major Braclays threads.

Bit of a numpty question here and I'm sure and I'm overlooking something obvious... but the cashier in Barclays couldn't help me on this one either so perhaps it's not all that clear...

6.50% AER**/6.31% Tax free*

Why show 'Tax free' when it's an ISA? Which rate would you get?
I've read Barclays' explanation of AER and I still don't understand!

6.31% is the applied rate that Barclays pay, the interest is paid monthly, if the monthly interest is added to the account it effectively earns interest on interest thus equating to a variable A.E.R of 6.50%.

If the monthly interest is withdrawn then the rate obtained is a variable rate of 6.31%.

It should be noted that if Base Rates reduce, Barclays ISA rate is likely to reduce.

bristolleedsfan

BruceyBonus wrote: »

£1,064.96

Then annual interest at 6.50%
Balance Interest
£1,000.00 £65.00
£1,065.00
You can see that it is in fact the same rate.

Doesnt look the same to me or are my eyes playing tricks. :laugh:

BruceyBonus

bristolleedsfan wrote: »

Doesnt look the same to me or are my eyes playing tricks. :laugh:

A matter of 4p, probably due to my rounding:rotfl:

bristolleedsfan

BruceyBonus wrote: »

A matter of 4p, probably due to my rounding:rotfl:

Yip.... ..

frivolous_fay

Thanks for being gentle! I'll sort out an account when the queues go down!