Are cash ISA's worth the hassle ?

earlgrey_3

Baldur wrote: »

The problem is certainly not restricted to Nationwide, they sound positively speedy compared to Lloyds TSB - who have yet to successfully transfer a Cash ISA from my original application in early March 2008. But, hey, it's only been eight months.

You too?

They finally got mine and wife's sorted out two weeks ago (30 October). Both initiated on 7 April. Incompetent to the end they reluctantly agreed to pay £100 each for loss of interest and hassle then forgot to send cheques. The complaints department could only be reached via voice mail, even by the local branch manager, and were ignoring him while he faced the music poor man.

Ironic that the two most most incompetent banks on the planet, them and Santander/Abbey, are mopping up other failed banks.

Baldur

earlgrey wrote: »

You too?

Glad to hear that you're sorted. No such easy route for me, went through branch, area & regional management, customer retention, CEO, and Financial Ombudsman Service to actually get to a stage where I at least now know where my 4 years' plus of funds are located, even if the transfer issue is not resolved.

Sam37

These problems with transfers have made me wonder whether they are worth the hassle.

I like to see what I do and transfer and manage online (probably a false sense of security but at least it feels better), the first bit is not possible with ISAs and I hate the feeling of something ''being in the post'' or somewhere on a pile -apart from any interest being lost. I do wonder whether the extra bit of interest is worth that anxiety, although I have stuck with it so far, especially with the view of becoming a higher rate tax payer at some stage.

Opening ISAs is not so much the problem, that can be done easily online with some banks, but to get a good deal you do need to transfer every now and then. I might drop out if that doesn't improve at some stage.

Baldur

Sam37 wrote: »

These problems with transfers have made me wonder whether they are worth the hassle.

I must say that all other Cash ISA transfers that I have carried out since the scheme began have gone without a hitch but this LTSB one has been a nightmare.

It's the first (and probably last) time that I have ever transferred to one of the 'big five' banks, as their rates have usually been totally uncompetitive.

Primrose

I don't think the problem of interest rates for Cash ISAs is any different from other forms of savings. The issue is that if you don't use your allowance every year you lose it. So if you're able to put savings in them every year, over a period of time you can build up a useful pot of money which isn't taxable. Whether you chose to chase the highest interest rate on any of your savings is a personal thing. You have to offset the amount of time and admin you spend against the need for extra money. With so many ISA providers now imposing penalties for moving, or not accepting transfers in, I think the best option is to go for a reliably consistent provider and stick with them. Unless you're desperate for the extra interest, it saves hassle but at least ensures that you keep the tax-free status of those savings. Anybody who is a tax payer and doesn't use their annual allowance is short sighted. We're all going to be paying a lot more tax in the years ahead as we pay the penalty for government borrowing to ride through the deeping recession. Protect what savings you can, while you can !

moneymoke

I think one of the main problems with cash ISA's is the fact that at the moment one cannot withdraw an income from them like you can with income unit trusts and other investment savings accounts to, say, boost one's income during retirement years.

The rules need to be changed for this to happen.

rb10

moneymoke wrote: »

I think one of the main problems with cash ISA's is the fact that at the moment one cannot withdraw an income from them like you can with income unit trusts and other investment savings accounts to, say, boost one's income during retirement years.

The rules need to be changed for this to happen.

You can withdrawn an income from ISAs, just like any other savings account ... just make a normal withdrawal; transfer the money to your current account.

jeml6

moneymoke wrote: »

I think one of the main problems with cash ISA's is the fact that at the moment one cannot withdraw an income from them like you can with income unit trusts and other investment savings accounts to, say, boost one's income during retirement years.

The rules need to be changed for this to happen.

rb10 - you beat me to it - i don't get moneymokes problem, how hard can i be just to make a withdrawal! okay, if its a fixed rate isa withdrawals may not be allowed but surely if you open a frisa you will know that!

is it worth the hassle - well my frisa's are currently returning me £3,700 per annum tax free! if that was non-isa i would be losing £740 min - so if you can't be bothered to move your money around once a year well then you deserve only .05% interest and pay tax on it - so don't moan!

moneymoke

Yes, I can withdraw an income from my NatWest e-isa account, but at a cost. It looks like I lose 1 months interest which is 2.7% on the whole savings amount for that month which is a large penalty. That means that financially it wouldn't be worthwhile to draw an income as the rules stand at the moment.

Sure, if I could withdraw monthly interest with no penalty, then there would be no problem. If I withdraw monthly interest from my high street building society account, they don't charge a penalty for doing that, but then I do pay tax on that interest as it's not a cash ISA.

rb10

moneymoke wrote: »

Yes, I can withdraw an income from my NatWest e-isa account, but at a cost. It looks like I lose 1 months interest which is 2.7% on the whole savings amount for that month which is a large penalty. That means that financially it wouldn't be worthwhile to draw an income as the rules stand at the moment.

No - it's nothing to do with the rules. It's the fact that you have chosen to put your money in an account that penalises you for withdrawals.

You could equally well choose to have a high-rate ISA with unlimited free withdrawals. Then you could easily get a monthly income from your ISA.

It may be worth looking at the list of top ISAs to see if there is another one that you can transfer into that suits your needs better.