Lloyds and other fixed rates - beware

Compound_2

Transferring out of a Fixed Rate ISA will be considerably more complicated than getting out of an account like Barclays Tax Beater. As bristolleedsfan has said, people leaving Barclays should apply to transfer about 30 days before the promotional rate ends to avoid being kept on a lower rate for up to 30 days while the transfer is pending. However, this works only because the Barclays account has always been instant access. If you attempt to transfer out of a fixed rate account 30 days before the term ends, you will incur an interest penalty, eg 90 days. So you will have to apply to transfer after the term has ended and suffer a poor interest rate for 30 days. And working out when the term has ended is complicated due to issues such as delays and backdating.

bristolleedsfan

Compound wrote: »

Transferring out of a Fixed Rate ISA will be considerably more complicated than getting out of an account like Barclays Tax Beater. As bristolleedsfan has said, people leaving Barclays should apply to transfer about 30 days before the promotional rate ends to avoid being kept on a lower rate for up to 30 days while the transfer is pending. However, this works only because the Barclays account has always been instant access. If you attempt to transfer out of a fixed rate account 30 days before the term ends, you will incur an interest penalty, eg 90 days. So you will have to apply to transfer after the term has ended and suffer a poor interest rate for 30 days. And working out when the term has ended is complicated due to issues such as delays and backdating.

My plan with the Nationwide Fixed Rate ISAs that i will have maturing in 2009 is to organise transfer ins elsewhere around 30 days before they are due to mature, with instructions that Nationwide dont transfer out until the maturity date.

People with fixed rate ISA(s) maturing are however stuck with having to pick a transfer in ISA at a certain time the following year.

Compound_2

bristolleedsfan wrote: »

My plan with the Nationwide Fixed Rate ISAs that i will have maturing in 2009 is to organise transfer ins elsewhere around 30 days before they are due to mature, with instructions that Nationwide dont transfer out until the maturity date.

How would this be done? ISA transfers are handled by the new manager and their forms don't usually allow this. Can both organizations be trusted to ensure your instruction is carried out exactly on the right day, when lack of timeliness is the norm among the best paying institutions?

mr_fishbulb

Compound wrote: »

Transferring out of a Fixed Rate ISA will be considerably more complicated than getting out of an account like Barclays Tax Beater. As bristolleedsfan has said, people leaving Barclays should apply to transfer about 30 days before the promotional rate ends to avoid being kept on a lower rate for up to 30 days while the transfer is pending. However, this works only because the Barclays account has always been instant access. If you attempt to transfer out of a fixed rate account 30 days before the term ends, you will incur an interest penalty, eg 90 days. So you will have to apply to transfer after the term has ended and suffer a poor interest rate for 30 days. And working out when the term has ended is complicated due to issues such as delays and backdating.

I don't know about others, but with the Lloyds one, after 12 months it converts into a normal variable cash ISA - easy to transfer out from.

Compound_2

Yes, but the variable cash ISA has an uncompetitive rate and the transfer process could take 30 days.

mr_fishbulb

Compound wrote: »

the transfer process could take 30 days.

But so could the Barclays Tax Beater, and the bonus on that only lasts 12 months too.

surfcat

Lloyds standard cash is 5.25% for the amount I have in the fixed rate, so its not exactly disastrous!

bristolleedsfan

mr_fishbulb wrote: »

But so could the Barclays Tax Beater, and the bonus on that only lasts 12 months too.

Transfer out can take place before the 1% bonus is removed.

In reply to Compound, it will be Lloyds responsibility for transferring out the ISA so up to them to ensure that the fulfill any written instructions that they receive not to transfer out the ISA until it matures.

To: Surfcat, some people are moving very large sums of money into Lloyds ISA so 1% per annum below the odds for any period of time for those people would be "disastrous" :eek:

mr_fishbulb

bristolleedsfan wrote: »

Transfer out can take place before the 1% bonus is removed.

Ah, but the interest on the Barclays ISA before the bonus is variable, on Lloyds it is 6.5% fixed

surfcat

bristolleedsfan wrote: »

Transfer out can take place before the 1% bonus is removed.

In reply to Compound, it will be Lloyds responsibility for transferring out the ISA so up to them to ensure that the fulfill any written instructions that they receive not to transfer out the ISA until it matures.

To: Surfcat, some people are moving very large sums of money into Lloyds ISA so 1% per annum below the odds for any period of time for those people would be "disastrous" :eek:

Indeed, the amount I have in, 1 month at 1% below the odds would cost me £17.50. However you are assuming that rates are staying at their current level. All the indications from the numpties at the BoE are that they will try and inflate their way out of the current predicament and lower interest rates again.

Savings rates are more likely to beat base rates when those base rates are low, than do so when they are high.