Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
S&P 500 Just 2% Below Record High, But There's More Stock Market Uncertainty - 19th Jul 18
Stock Market Technical Picture - 19th Jul 18
Gold Market Signal vs. Noise - 19th Jul 18
Don’t Get Too Bullish on Gold - 19th Jul 18
Bitcoin Price Rallies to Upper Channel – What Next? - 19th Jul 18
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18
US Stocks Set For Further Advances As Q2 Earnings Start - 15th Jul 18
Stock Market vs. Gold, Long-term Treasury Yields, 10yr-2yr Yield Curve 3 Amigo's Update - 15th Jul 18
China vs the US - The Road to War - 14th Jul 18
Uncle Sam’s Debt-Money System Is Immoral, Tantamount to Theft - 14th Jul 18
Staying in a Caravan - UK Summer Holidays 2018 - Cayton Bay Hoseasons Holiday Park - 14th Jul 18
Gold Stocks Summer Lows - 14th Jul 18
Trump US Trade War With China, Europe Consequences, Implications and Forecasts - 13th Jul 18
Gold Standard Requirements & Currency Crisis - 13th Jul 18
Focus on the Greenback, Will USD Fall Below Euro 1.6? - 13th Jul 18
Stock Market Outlook 2018 - Bullish or Bearish - 13th Jul 18
Rising Inflation is Not Bearish for Stocks - 13th Jul 18
Bitcoin Picture Less Than Pretty - 13th Jul 18
How International Observers Undervalue the Chinese Bond Market - 13th Jul 18
Stocks Trying to Break Higher Again, Will They? - 12th Jul 18
The Rise and Fall of Global Trade – Redux - 12th Jul 18
Corporate Earnings Q2 2018 Will Probably be Strong. What This Means for Stocks - 12th Jul 18
Is the Relative Strength in Gold Miners to Gold Price Significant? - 12th Jul 18
Live Cattle Commodity Trading Analysis - 12th Jul 18
Gold’s & Silver’s Reversals’ Reversal - 12th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

UK Banks Such as Halifax (HBOS) Underpaying Cash ISA Saving Account Interest Rates

Interest-Rates / ISA's Jan 18, 2010 - 12:53 AM GMT

By: Nadeem_Walayat

Interest-Rates

Best Financial Markets Analysis ArticleThe tax payer bailed out bank Halifax (HBOS), which was forced into a shotgun wedding with Lloyds TSB in Sept/Oct 08 to prevent nationalisation, the combined group later going on to become defacto nationalised as the HBOS exploding mortgage book shredded Lloyds TSB's balance sheet to pieces, illustrates the consequences of an artificial banking system as borrowers and savers pay the ultimate price of bailing out the banks.


HBOS is presently offering 2 year fixed rate savings accounts to its customers.

The 2 year fixed rate Web saver paying 4.2% AER

The 2 year fixed rate Cash ISA paying 3.50% AER

Why is the majority government (tax payer) owned bank under paying TAX FREE accounts by 21.5% ?

The tax charged on savings is 20% for most tax payers that fall into the basic rate tax band. Therefore not only are CASH ISA savers not getting ANY of the TAX FREE BENEFITS but are in fact GETTING LESS than for virtually an identical NONE tax free savings account.

What does this imply ?

It implies that the GOVERNMENT apparently does NOT want people to utilise tax free savings accounts, it WANTS people to PAY Taxes and hence opt for the TAXABLE Accounts in advance of TAX RISES in the next financial year.

At this point in time the only winners are the NON TAX PAYERS, as they can get the full 4.20% interest tax free as under the circumstances they would LOSE money by depositing into the CASH ISA equivalent.

Unfortunately the practice of short changing Cash ISA savers is widespread across the whole UK banking sector where virtually ALL banks pay significantly less on tax free accounts when compared with their taxable savings accounts which negates virtually all of the tax free benefits of the Cash ISA savings accounts.

This IS as a consequence of Tax Payers bailing out the bankrupt banks that instead of competing in an open free market banking system instead suckle at the teat of the Bank of England for liquidity flows at a rate of just 0.5% and only marginally higher in the interbank market, whilst the tax payers, borrowers and savers are pick up the bill in the form the of the spread between interest rates as the following graph illustrates the spread between the rate the banks borrow from the Bank of England and the interbank market and the SVR rate charged to mortgage customers.

The only way Britain can have a market based banking system is if tax payer support of the banks that allows them to enjoy huge profit margins is removed, for if any of the banks cannot compete then they have no place to continue being in business at the detriment of the borrowing and saving British public and tax payers.

UK Interest Rates Forecast 2010 and 2011

Market interest rates are already on a climb, especially for borrowers with even savings rates recently perking up. I expect the Bank of England to play catch-up mid 2010, with small baby step increases so as not to offer too much distress to the infant like banks as it weans them off excess liquidity. Last weeks in-depth analysis and forecast for UK interest rates for 2010 and 2011 concluded :

UK Interest Rates Forecast 2010-11: UK interest Rates to Start Rising From Mid 2010 and Continue into end of 2010 to Target 1.75% / 2%, Continue Higher into Mid 2011 to Target 3%.

For the full implications of the interest rate trend forecast, read the full analysis here.

Source: http://www.marketoracle.co.uk/Article16561.html

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market . Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

DH
18 Jan 10, 16:14
ISA's

The banks have always dipped their hand into the ISA's, clearly the greedy $£"%^*s believe they have a right to a slice of you tax free interest, they want their cut, like the organized criminals they are.

Granted under the current circumstances they are shall we say "ripping the arse out of it" but it has alsways been a feature of their practices, to take their cut.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules