Is it worth me changing my ISA?

inamabilis

Hi,

I have a cash-ISA with a local building society the details are as follows:
Investment: Probably just under 8k - I haven't checked the balance since the interest was applied.
Interest Rate: 5.35%
Rate Guarantee: No
Interest Details: Calculated Daily, Added Yearly

I do not get penalised for withdrawing/transferring my ISA.

If I were to change I would be looking for an ISA that has no notice period, and wouldn't penalise me for transferring the isa away from them. I don't want to consider fixed term ISAs and don't really want to have an ISA with a temporary bonus rate.

From my research it looks like ICESAVE would be a good provider, addressing all of my requirements, I just have a few questions.
It says that I can choose whether to have my interest paid annually (6.10%) or monthly (5.94%). Is one of these better off than the other (ignore things such as the money being in the account every month) or is 5.94% monthly effectively the same as 6.10% annually?
In your opinion is it worth transferring providers?
Does anybody have any suggestions of other providers, or do you think i've made the correct choice?

Thanks

Lokolo

Ok go back to the page:

http://www.icesave.co.uk/easy-access-isa.html

You see the table which has the interest rates? There is a column which says AER, which is the Annual Effective Rate, which means thats the rate you will get for keeping your money in the account for a year, no matter if interest is paid monthly or yearly.

You should go for yearly as monthly you'll get tempted to spend it every month :T

And no thats a goodun, theres a A&L one I think but thats 6.15% so not much difference.

And if you want to put in the effort for an extra 0.75% interest a year then yes, its worth it :-)

inamabilis

Thanks for the quick reply.
I think I will change - I found an interest calculator online which suggested that by swapping i'd be £63 better off for not really doing anything different.
£63 for free seems like a good plan to me!

YorkshireBoy

Each day's interest lost during the transfer will take 8 days to recover in the new account.

Assuming 7 days, that would mean you wouldn't be 'in pocket' for nearly 2 months.

So, your benefit on £8K (over the next 12 months) would be an extra (£8,000 x 0.75% / 12 x 10 £50.

Disclaimer:

Only rough figures, but you get the idea?
Assuming all rates remain the same...and they won't!

inamabilis

I understand, but still, £50 for free?
And there's no reason to suspect that the icesave accounts interest rates will drop to below that of the local building society?

Would you recommend I didn't change providers?
Or changed to a fixed rate account?

Hungerdunger

inamabilis wrote: »

And there's no reason to suspect that the icesave accounts interest rates will drop to below that of the local building society?

Would you recommend I didn't change providers?
Or changed to a fixed rate account?

I'm afraid you're asking the impossible here. If everyone knew what was going to happen over the next six or twelve months we'd all be saving in the same accounts. Icesave are offering good rates at present presumably because they want to increase their market share in the UK. So it's quite possible that they might offer less attractive rates at some stage in the future once they've reached a certain target. Or they might not!

Again, with the fixed rate accounts, if you know you won't need the money for 12 or 24 months they might be a good idea if you think that interest rates on savings will reduce over that period. I've got most of my savings in fixed rate B. Soc bonds and ISAs because I suspect that rates will drop slowly. But I could be completely wrong.