Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Silver Still Cheap Relative to Gold, Trend Forecast Update Video - 19th Sep 19
Baby Boomers Are the Worst Investors in the World - 19th Sep 19
Your $1,229 FREE Tticket to Elliott Market Analysis & Trading Set-ups - 19th Sep 19
Is The Stock Market Other Shoe About To Drop With Fed News? - 19th Sep 19
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Best Cash ISA Last Chance, 4% Fixed Santander, AA Instant 3.5%

Personal_Finance / ISA's Mar 20, 2012 - 12:40 AM GMT

By: Nadeem_Walayat

Personal_Finance

Best Financial Markets Analysis ArticleWhilst George Osbourne prepares to mask Budget 2012 tax rises by means of the stealth Inflation tax on indexation of allowances, against which one of the primary ways savers have to protect the value of their wealth against inflation theft is via Cash ISA's, for which the deadline deadline for utilising 2011-2012 allowances is imminent (5th April 2012) therefore this is your last chance to use it or lose.


The market interest rates have been continuing a trend towards normalisation which is resulting in a uptrend in interest rates as the market is further breaking away from the UK base interest rate of 0.5% that to all intents and purposes is irrelevant for all UK retail customers where even the best mortgage rates charged can be at least eight times higher and now the same holds true for the ISA market as new fixed rate ISA's illustrate.

Beware of Tricks Banks and Building Societies Play on ISA Savers

One of the biggest tricks that the banks and building societies tend to play against ISA savers is to offer a lower interest rate on ISA's than similar non ISA saving accounts, therefore wiping out virtually all of the tax free benefits of a Cash ISA account for basic rate tax payers.

Beware of price comparison sites, they tend to offer what pays them commission and not necessarily the best rates available.

Act fast to meet the deadline for applications for 2011-12, especially for applications as new customers.

Best Instant Access ISA's

Financial Institution Interest Rate Minimum £ Comments
AA ISA 3 3.50% £2,500 Up from 3.05% for ISA2, Does not allow transfers in. Includes a 3% bonus for 12 months.
Santander 3.30% £2,500 Allows transfers in, includes a 2.8% bonus for 12 months
ING Direct 3.00% £1 Does not allow transfers in. Rate guaranteed for 12 months.

 

Best Current Fixed Rate ISA's (1 Year)

Financial Institution Interest Rate Fixed Period Minimum £ Comments
Santander 3.5% 1 Year £2,500 Allows transfers in. Early withdrawals allowed subject to 90days loss of interest.
Metro Bank 3.25% 1 Year £1 Allows transfers in. Early withdrawals allowed subject to 180days loss of interest.
Aldermore 3.2% 1 Year £1000 Allows transfers in, small bank.

 

Best Current Fixed Rate ISA's (2 Year)

Financial Institution Interest Rate Fixed Period Minimum £ Comments
Santander 4% 2 Years £1 Allows transfers in. Early withdrawals allowed subject to 120days loss of interest.
Halifax 3.7% 2 Years £500 Allows transfers in. Early withdrawals allowed subject to 180days loss of interest.

 

Which ISA ?

Santander has been a busy bee by raising rates on its ISA's by typically 0.5% from just a few weeks ago, these rate hikes are indicative of a market that is hotting up as the UK retail loans and savings market further detaches itself from the irrelevant Bank of England's base rate.

The best instant access is from the AA. However, it does not allow transfers in, the best for consolidating your existing instant access and maturing ISA's into one account is Santander. Which is something savers should seek to do as larger balances can attract higher interest rates (stay within banking group compensation limits).

Of the 1 year fixed rates, Santander tops the market, with the Santander 2 year 4% fix which beats official inflation at 3.6% (Jan). Longer-term fixes are available, for instance BM Savings offers 4.25% for a 5 year fix, but this rate compares against their 5 year non ISA bond which pays 4.65% which illustrates the trick of under paying Cash ISA savers, which over 5 years would amount to a very significant difference in interest paid.

The bottom line is that market interest rates are on the rise as a consequence of the trend towards normalisation of the UK interest rate market as opposed to the artificial market the Bank of England has been engaged at manipulating as a consequence of its primary objective which is to prevent financial armageddon. A normal interest rate market would tend to pay savers on instant access accounts more than the rate of Inflation which is 3.6% CPI, and RPI 3.9%, which implies a normal interest rate of at least 4% so we are still at least 0.5% away from the best minimum rate a normal market would be offering, so plenty of scope for a further 0.5% rise in the market savings interest rates over the coming months regardless of the the base rate staying at 0.5%.

Summary of ISA Rules & Benefits

  • The ISA accounts are TAX FREE, and do not have to be entered onto any tax returns. The equivalent taxable return on a 3% cash ISA for standard rate tax payers is 3.6%. For higher rate tax payers it is 4.2%.
  • The income from tax ISA's does not count against many mean tested benefits such as Tax Credits.
  • The Allowance for 2011-12 is £10,680, £5,340 for cash and £5,340 for shares ISA's or the whole £10,680 into a shares ISA.
  • You can only open ONE New cash ISA per tax year, and you can add new monies to One Cash ISA per tax year (see transfers). Similarly you can open only one new Shares ISA per tax year.
  • You do not have to open a Cash ISA with your existing provider, i.e. you can open an account at different providers every year.
  • Most providers allow for transfers in. And ALL should allow you to transfer out.
  • Once you withdraw from a Cash ISA you cannot then then re-deposit into. The £5,340 limit refers to total deposited, and not maximum account balance. So if you deposit £5,340, and withdraw £1000, then you cannot re-deposit that £1000 in the same tax year as you have used up your £5,340 deposit limit.
  • To maximize your tax free interest, it is best to open your account at the start of the tax year.
  • The Financial Services Compensation Scheme (FSCS) guarantees the first £85,000 (Euro 100,000) per person, per institution. Those with sizable savings that total more than £85,000 should ensure that their institutions really are separate, especially given the banking crisis forced mergers.
  • There is the facility to transfer Cash ISA monies into Shares ISA's but NOT from Shares ISA's to Cash ISA's .
  • Next years Cash ISA allowance (2012/13) will increase inline with inflation to £5,640.

Source and Comments:

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2012 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 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 focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 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

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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

6 Critical Money Making Rules