Alliance and Leicester 10% ISA linked to investment?

babyblooz

Just been into our local branch where we have arranged to transfer some ISA funds from other providers, to take advantage of the 6.25% rate that A and L are offering. While we were there, we discussed the 10% ISA deal that they have starting on Monday, where in order to get 10% you have to invest an equal amount in their 6 year plan, which guarantees a minimum payout of 41/4% per year. Their spiel is that if the stock market rises, then there is a 60/40 split of the profits, with the customer getting the 60% share, and them pocketing the 40% share, but this is at the end of the 6 year period.

I was concerned about the penalties if you pull out before the end of the 6 year period, and she did say that you may get less than you put in, but it is up to A and L how much they knock off, should this happen. I would have thought there would be a sliding scale of charges or something similar, in black and white, to give customers a better idea of what would happen to their money.

We were thinking of going ahead, and have plans to go in and sign up next week, as it only comes available on Monday, but, thinking about it now, it doesn't seem such a good deal, when we could just move our money about each year to get the best rate, which is what we do now.

I need the income from the monies to fund my retirement as I didn't pay into a company pension scheme until 13 years ago, and am in my fifties now.

We try to put the full 6 grand a year in, between hubby and myself.

Our main concerns are: is it a good investment, in terms of expected profits, as the 10% on the one account is not fixed, and can change at any time

and should there be a set charge regarding if we should need to pull out early?

I am comfortable with checking rates from one provider to another, but not too comfortable with stocks and shares!

The FA was very clear in explaining what we asked about, but I am not too confident that I asked all the right questions. I intended to come on here and check what was said to us anyway, as I know that the people on here have a far wider awareness than I do, so any help would be appreciated. At the end of the day, if its not for us, then we will just plonk the money in the 6.25 ISA and think about things until we are more confident.

Any advice would be welcome.

daisydog_3

I'm sure this 10% ISA offer is also available to customers who are willing to open their premier current account and credit it with at least £500 per month, unless I've misunderstood?

babyblooz

Yes, I think its open to other people, not just existing customers. I still need some advice if anyone has any thoughts!

new

daisydog wrote: »

I'm sure this 10% ISA offer is also available to customers who are willing to open their premier current account and credit it with at least £500 per month, unless I've misunderstood?

I have just spoken to Alliance and Leicester [an 0800 number- great ! free!!] and the 10 % TSA is available with the premier current account.

Very helpful person on the phone.

Initially, I applied for the current account with 6.50% interest, but on second thoughts, seeing the 10% ISA, the linked cuurent/isa account seems a better deal, interest wise.

[If you transfer, then 50% of ISA locks into stocks and shares]

babyblooz

What do you think about having to tie it up for 6 years though? And how long do you think they will keep the 10% offer on for the other half of the investment?

daisydog_3

New, did you get the impression that you are required to have your main income go into the premier account or would a transfer of 500 per month be sufficient to benefit from the 10% deal?

kipwilliams

the general impression i've seen on here is that a 10% ISA might be good, but isn't worth being tied in to a poor investment product for 6 years for.

sorry if i sound negative.

new

daisydog wrote: »

New, did you get the impression that you are required to have your main income go into the premier account or would a transfer of 500 per month be sufficient to benefit from the 10% deal?

As far as I understand it, as long as one pays in £500 every month [or transfer £500 every month, which is what I will be doing].

new

kipwilliams wrote: »

the general impression i've seen on here is that a 10% ISA might be good, but isn't worth being tied in to a poor investment product for 6 years for.

sorry if i sound negative.

As it is not the stocks and shares ISA, I am not tied to 6 years.
However, the ISA is linked to current account reamining open.

When the rate drops, I will transfer the ISA, and following that, will also close current account.

babyblooz

I suppose I am wondering if the 10% I will gain on the ISA is going to be worth what I may lose if the other half i.e. the part dependent on the stock market FTSE 100 performing well, doesn't do brilliantly. How much is it likely the stock market will make over 6 years, considering I will only get just over half of what the difference is.

Lokolo

You don't know..... thats why its a gamble! If you want to play a risk, go for it, if you want to play it safe, don't.