Fixed rate bonds verses cash ISA

Melmar
Melmar Posts: 42 Forumite
First Post First Anniversary Combo Breaker
in Savings & investments
This may seem a silly question but can anyone tell me, is a fixed rate bond paying 1.95% AER better than a cash ISA paying 0.65% AER

Thanks for your help

Comments

  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
    Yes it is.

    The fixed rate bond pays 1.3% more interest.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
    First Anniversary Name Dropper First Post Photogenic
    If you put £100 in, after one year you'd have
    1. £101.95p
    2. £100.65p

    Even if you paid tax on the bond, lets say you are a 40% tax earner and earn more than £500/year in interest, you'd still have £101.17p. And thats just about the worst case tax. If you area lower rate tax payer and overall earn less than £1,000 in interest, you'd have the full £1.95
  • PeacefulWaters
    PeacefulWaters Posts: 8,495 Forumite
    How much interest can you get on a fixed rate cash ISA?
  • jimjames
    jimjames Posts: 17,590 Forumite
    Photogenic Name Dropper First Anniversary First Post
    PeacefulWaters wrote: »
    How much interest can you get on a fixed rate cash ISA?

    More to the point how much interest can you get on other accounts outside an ISA...
    Remember the saying: if it looks too good to be true it almost certainly is.
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