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New ISA Interest Rate from 1st May 2020

HelloDuck
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New ISA Interest Rate from 1st May 2020

I have been informed by my Building Society that the interest rate on my ISA is reducing from 1st May on a balance of

£1 to £9999             from 0.7% to 0.01%    yes 0.01%

£10,000 to £49,999 from 0.8% to 0.03%

£50,000 plus            from 1.0% to 0.05%

If RPI is 2.5% your money is loosing 2.49% each year 

 

They also said that they were reducing overdraft rates from 39.9% to  18.9% until 17th July if you had one  

 

I shall be doing a withdraw and  topping up my Premium Bonds before Friday so the new bonds will be in the June draw with interest rates that low its a no brainer

 

 

 

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nozzer
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Re: New ISA Interest Rate from 1st May 2020

@HelloDuck 

If you withdraw the cash you have lost the ISA allowance on that block of cash, in other words, why not transfer it to somewhere with a sensible rate, such as the Yorkshire BS. Cash iSAs usually transfer very quickly...

https://www.moneysupermarket.com/savings/cash-isas/?p=0&cicp1=&source=GOO-131772D1&mckv=s3bY6cxFp|dt...

idonno
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Re: New ISA Interest Rate from 1st May 2020


@HelloDuck wrote: I have been informed by my Building Society that the interest rate on my ISA is reducing from 1st May on a balance of

£1 to £9999             from 0.7% to 0.01%    yes 0.01%


I suppose it does depend on how much you are looking at. But do shop around and not necessarily just look at ISA's. With Coventry BS I'll still be getting 1.85% on a regular saving account come May. It was 2.50%. Premium bonds are ok but I wouldn't say I've made a killing with them over the last 30 yr or so. At one point I did work out how much the winnings translated into % rates over time and it wasn't much removed from the amount I'd have got putting it in a savings account. Mind you if you get a big payout 😁, one can always dream.

 

But I think most saving rates (even premium bonds) will gravitate downwards.

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billnotben
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Re: New ISA Interest Rate from 1st May 2020

We are all in it together accept those with any savings will have to support everyone else and do without themselves.

I guess I will probably get a few more premium bonds. Or just put it under the mattress and then claim I'm destitute.

Jonpe
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Re: New ISA Interest Rate from 1st May 2020

Building Societies/banks often offer ISAs with reasonable interest rates at the end of March every year and you can usually open one with a £0 balance until 6th April when you are allowed to start contributing to that year's ISA.

@idonno, I've been meaning to open a Coventry BS Regular Saver account and notice that their Regular Saver (2) account is still being advertised at 2.5% so it looks like they offer this in order to lock you in for a year, then drop the interest rate.  1.85% is still quite good in today's market though.

dvorak
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Re: New ISA Interest Rate from 1st May 2020


@nozzer wrote:

@HelloDuck 

If you withdraw the cash you have lost the ISA allowance on that block of cash, in other words,

Not always, though that was the case in the past.

https://www.moneysavingexpert.com/savings/flexible-ISAs/

Isa rules aren't just about how much you pay in; some accounts are flexible, meaning that you can withdraw money from an Isa account and replace it, without the replacement counting further towards your Isa allowance.

Read more: https://www.which.co.uk/money/savings-and-isas/isas/cash-isas/cash-isa-rules-and-allowances-a6h7d7y2... - Which?
Isa rules aren't just about how much you pay in; some accounts are flexible, meaning that you can withdraw money from an Isa account and replace it, without the replacement counting further towards your Isa allowance.

Read more: https://www.which.co.uk/money/savings-and-isas/isas/cash-isas/cash-isa-rules-and-allowances-a6h7d7y2... - Which?
Isa rules aren't just about how much you pay in; some accounts are flexible, meaning that you can withdraw money from an Isa account and replace it, without the replacement counting further towards your Isa allowance.

Read more: https://www.which.co.uk/money/savings-and-isas/isas/cash-isas/cash-isa-rules-and-allowances-a6h7d7y2... - Which?
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nozzer
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Re: New ISA Interest Rate from 1st May 2020

@dvorak 

Ah yes. That changed recently I think. But it has to go back into the same account doesn't it? So i's not possible to withdraw cash and then deposit it in another ISA paying a better interest rate without losing the tax benefit I don't think. But I stand corrected.

dvorak
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Re: New ISA Interest Rate from 1st May 2020

You can't put in more than the allowance for that year - so if your ISA has more than the yearly allowance in or you want to put more in this tax year than you'd need to transfer as that  isn't included in your ISA allowance.

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nozzer
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Re: New ISA Interest Rate from 1st May 2020

@dvorak 

Thanks. As I thought. 👍

Champnet
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Re: New ISA Interest Rate from 1st May 2020

I too received an interest rate change note from my bank. Normally I'd be annoyed but as I'd just seen over 20% wiped off my pension fund due to stock markets fluctuations I'm more than happy just to see the cash in the bank.

A lot of our savings are now in Premium Bonds, not a big return but there is an element of entertainment....

idonno
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Re: New ISA Interest Rate from 1st May 2020

@Jonpe It might seems a big drop but all they have done is drop it by the amount that the BOE rate dropped in March, so by that measure it isn't too bad. TBH I'm surprised its still as high as it is. Before I opened the account I did have two thoughts when I read it was a variable rate. Like you say, compared with quite a lot of other rates, it's still higher than a fair number.

 

With cash ISA's you do have to keep an eye on the rates on offer. Some, to me, are pretty dire, even if they are tax free. You get up to £1000 (£500 higher rate) interest tax free anyway (supposedly equiv to having £74,000 stashed away).

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Jonpe
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Re: New ISA Interest Rate from 1st May 2020

I suppose the banks make quite a bit of money out of people who don't keep an eye on what interest rate they are getting.  On most accounts these days the interest rate seems to drop after a certain period, often because a time-limited bonus ends, so "be ready to switch" as Martin Lewis keeps saying.

Jonpe
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Re: New ISA Interest Rate from 1st May 2020

@idonno, The interest rate on Coventry BS's Regular Saver (2) has now also dropped to 1.85%.

idonno
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Re: New ISA Interest Rate from 1st May 2020

Very true @Jonpe but still better than the paltry amount on offer now on my ISA, which has dropped to 0.30% (was 1.4%) Time to move it I think

 

Those premium bonds are beginning to look attractive, although I never realised they'd put the max holding up to £50K. Don't think I'd get too many prizes each month on my paltry amount.

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Champnet
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Re: New ISA Interest Rate from 1st May 2020

Our 50k returns on average £75 monthly. That's just under 2% net per annum.