It’s those darn ISAs again. For the benefit of foreign nationals, ISA = Individual Savings Account, the interest (or lack thereof) on which is supposedly tax-free.
Today’s focus falls on Marks & Spencer Financials. We’ve had a pot of cash each in a fixed rate ISA account enjoying 5.17% over the last year – a huge interest rate by today’s standards. In retrospect it would have been smart to fix the account for a longer period but 20/20 hindsight is a wonderful thing which we all possess. Our accounts are about to “mature” so good ol’ M&S has been in touch asking what we want to happen next to our accounts.
First of all, it must be said that non of the M&S rates are actually derisory, unlike the Nationwide. Having said that, the Nationwide’s fixed rates are very slightly better. However, back to good ol’ M&S who you’d expect to know a little about interest rates, my boy. M&S is offering 1, 2 and 3 year fixed rates varying between 2.50% and 2.75%. According to their literature, “we understand that the unexpected can happen” so it is possible to withdraw completely from a one of the fixed rate deals but there’s a flat charge of £50, £75 or £100 depending upon the term. Hmm.
Alternatively M&S offers a so-called Advantage Cash ISA with a variable rate, currently 2.10%. However, if you leave your loot untouched for 12 months there’s a 1% bonus making a total of 3.10%. Furthermore, there’s no penalty for any withdrawals and it can be transferred to another manager should a miracle occur, the miracle in question being a recovery of the global financial cock-up resulting in a decent interest rate turning up.
So, if we’re not going to touch our money, we can fix for a year at 2.50% with a penalty for emergences or we can go for 3.10% with no penalty for emergencies.
Admittedly, being a variable rate account, the Advantage Cash ISA could have its rate reduced but we’re getting used to gambles in the modern financial mess, aren’t we?