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Cash Isas

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Ok, thought I would ask some advice...

I have a cash ISA and would of otherwise fixed for a year @ 5% with the portman (currently it is variable at 4.5% and seems to follow the BoE rate).

Or I could fix for 2 years at 5.25%.


I won't need this cash for 2 years, so the question is will fixed rates be 5.5% or higher this time next year? I.e. is it worth going the extra and fixing for 2 years?

I really don't think it's worth transfering to another provider, i'll get charged at every turn. Also, I think the rates at the Portman are on the whole quite good. Oh, and I have £25k in the ISA.

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You dont get charged anything for changing provider.

I'm keeping my variable rate with halifax since interest rate outlook is rocky at the moment.

Edited by zag2me

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Portman charge £30. I'm inclined to go for a year fix, then hope fixed rates are higher than 5.5% in 12 months. Might wait for the MPC minutes to give a clearer picture on this...

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Hi Jason

I am pondering exactly the same thing!

I opened one of those regular saver ISAs with the Portman last year, put in £250 per month, and therefore had £3000 (+ £125 interest) transfered to the easy access ISA, which was paying 4.4%, and recently moved up to 4.5%.

I think that I will probably go for the 1 year fixed, as I think that although rates will be higher in a year, I do not think they will be high enough that it is worth losing 0.5% pa interest by keeping it in the instant access rather than the fixed.

Of course, I will be transfering much less than you, and so have less to lose (opportunity cost) by opting for the fixed, if rates do go up significantly.

Also, I have a fear that as rates go up, defaults on debt will also rise, meaning that banks and BS's will try any recover the bad debt loss with lower rates for savers, and as such a 0.25% increase in BoE rate may not result in a 0.25% rise in savings rates. What is your opinion on that?

Also, will they calculate the interest due from the instant access ISA, at transfer date, and then put the whole lot in the fixed account?

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Hi Darth Calculus

After thinking about it, I'll probably go for the one year fixed. I don't think it's worth leaving it in the instant access, for the reasons you mentioned.

When you fix the ISA, they work out the interest to that date, then fix the whole lot.

I do think Banks will reduce savings (relative to the BoE rate) because of bad debt etc, but I have a little faith in the Portman, in that they are not aggressive lenders. So hopefully this won't affect them too much!

Happy days!

Edit: I might have been a little premature in having faith in the Portman: http://news.ft.com/cms/s/1b123b72-f819-11d...00779e2340.html

Edited by Jason

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