Andy1111
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ISA interest question - compound interest.
- Andy1111 asked 1 year ago in Investments
- See all 3 answers | report abuse
Expert Financial Adviser Answer
Richard Salter
answered 1 year ago
Noted Andy. My earlier answer addresses each of these points here - you may find that you are offered better - or worse - interest rates at the time of any second deposit.
However there are often deals around this time of year by banks and other deposit takers to capture more of your cash. They will sometimes say "give us the full £5,340 for this tax year's maximum cash ISA allowance AND up to a further £5,640 for the coming tax year's (increased) maximum cash ISA allowance" - so a total of up to £10,980 now and we will ensure that it is used to open two successive tax years cash ISAs at the same interest rate deal. They do this to capture more of your cash , keep you away from competitors and becasue they can be confident of maintaining the same interest rate and rough fixed rate term (every fixed rate anniversary will be different depending when you placed your first deposit - with a few exceptions) over a matter of a week or more covering the end of tax year on 5th April and start of the new tax year on 6th April.
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However there are often deals around this time of year by banks and other deposit takers to capture more of your cash. They will sometimes say "give us the full £5,340 for this tax year's maximum cash ISA allowance AND up to a further £5,640 for the coming tax year's (increased) maximum cash ISA allowance" - so a total of up to £10,980 now and we will ensure that it is used to open two successive tax years cash ISAs at the same interest rate deal. They do this to capture more of your cash , keep you away from competitors and becasue they can be confident of maintaining the same interest rate and rough fixed rate term (every fixed rate anniversary will be different depending when you placed your first deposit - with a few exceptions) over a matter of a week or more covering the end of tax year on 5th April and start of the new tax year on 6th April.
fixed rate ISA - interest question
- Andy1111 asked 1 year ago in Investments
- See all 2 answers | report abuse
Expert Financial Adviser Answer
Richard Salter
answered 1 year ago
Fixed rate (cash) ISA deposits are exactly that - fixed rates. This means that you cannot add money to the same account as rates and terms change all the time. At the point of deposit you will be told the interest rate, whether it is fixed or not and any term. Next time you come along with cash to deposit each of these items may have changed - the rate, term and type of account so i would expect that you NOT be able to get the same terms a year on.
However after Bank rate has been so low for so long I would expect that interest rates will actually start to rise from here and if this turns out to be true you may well find that you will be offered higher interest rates at future deposit points.
Yes the interest typically cumulates as per your calculations on your account each year. In other words most such accounts do not pay out the interest earned at the end of each year - only the cumulated amount at the very end of the fixed term period.
Bear in mind that capital deposits are protected up to £85,000 held with any single banking group but with inflation now running at 3.4% a basic rate taxpayer will currently need to earn 4.25% gross interest on a taxed deposit account (3.5% if ISA) if they are to maintain the real purchasing power of their cash by the end of a fixed rate period. Wherever possible therefore do keep any cash deposits you hold in Cash ISA accounts - instant access if you need access at short notice and then longer term fixed rates for any extra cash you feel it appropriate to hold.
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However after Bank rate has been so low for so long I would expect that interest rates will actually start to rise from here and if this turns out to be true you may well find that you will be offered higher interest rates at future deposit points.
Yes the interest typically cumulates as per your calculations on your account each year. In other words most such accounts do not pay out the interest earned at the end of each year - only the cumulated amount at the very end of the fixed term period.
Bear in mind that capital deposits are protected up to £85,000 held with any single banking group but with inflation now running at 3.4% a basic rate taxpayer will currently need to earn 4.25% gross interest on a taxed deposit account (3.5% if ISA) if they are to maintain the real purchasing power of their cash by the end of a fixed rate period. Wherever possible therefore do keep any cash deposits you hold in Cash ISA accounts - instant access if you need access at short notice and then longer term fixed rates for any extra cash you feel it appropriate to hold.
ISA interest question - compound interest.
- Andy1111 asked 1 year ago in Investments
- See all 3 answers | report abuse
Expert Financial Adviser Answer
Richard Salter
answered 1 year ago
Noted Andy. My earlier answer addresses each of these points here - you may find that you are offered better - or worse - interest rates at the time of any second deposit.
However there are often deals around this time of year by banks and other deposit takers to capture more of your cash. They will sometimes say "give us the full £5,340 for this tax year's maximum cash ISA allowance AND up to a further £5,640 for the coming tax year's (increased) maximum cash ISA allowance" - so a total of up to £10,980 now and we will ensure that it is used to open two successive tax years cash ISAs at the same interest rate deal. They do this to capture more of your cash , keep you away from competitors and becasue they can be confident of maintaining the same interest rate and rough fixed rate term (every fixed rate anniversary will be different depending when you placed your first deposit - with a few exceptions) over a matter of a week or more covering the end of tax year on 5th April and start of the new tax year on 6th April.
report abuse
However there are often deals around this time of year by banks and other deposit takers to capture more of your cash. They will sometimes say "give us the full £5,340 for this tax year's maximum cash ISA allowance AND up to a further £5,640 for the coming tax year's (increased) maximum cash ISA allowance" - so a total of up to £10,980 now and we will ensure that it is used to open two successive tax years cash ISAs at the same interest rate deal. They do this to capture more of your cash , keep you away from competitors and becasue they can be confident of maintaining the same interest rate and rough fixed rate term (every fixed rate anniversary will be different depending when you placed your first deposit - with a few exceptions) over a matter of a week or more covering the end of tax year on 5th April and start of the new tax year on 6th April.
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