Best Cash ISA 2015/16, Instant and Fixed Savings Interest Rates, New Flexible Withdrawal / Deposit Rule
Personal_Finance / ISA's Apr 22, 2015 - 04:12 AM GMTBy: Nadeem_Walayat
Good news, its a new tax year which means savers can deposit upto £15,240 into a tax free cash ISA savings account. Now for the bad news, the banking syndicate cash ISA rates remain at abysmally poor levels, despite some demand being siphoned off into the Coalition governments election bribe of the 4% paying Pensioner bonds against which no cash ISA can compete, though of course these bonds are only available to the over 65's.
So here we stand a couple of weeks into the new tax year with whopping big ISA allowances and no way to utilise them. Luckily for the banking syndicate we apparently now have zero inflation which means that the banks slick marketing machines can compare their pittance interest rates against so as to exaggerate returns when we all well understand that Britains savers continue to be screwed out of real returns courtesy of the last Labour governments financial and economic collapse that triggered the policy of zero interest rates, quantitative easing money printing and tax payer bank bailouts.
So don't be fooled that zero inflation for a few months is going to prevent the loss of purchasing power of your savings being siphoned off by the government (deficit spending) and the banking crime syndicate for the over-riding long-term trend is one of exponential inflation.
So whilst UK CPI inflation may hug zero for a few months more, thereafter expect inflation to start picking up once more towards the end of this year to be back above 2% by January 2016. Which means a sub 2% savings fix will soon once more erode purchasing power of savings.
The table below illustrates what has happened to cash ISA rates offered by apparently often reported on as best buy accounts of the tax payer bailed out Halifax mega-bank that in reality crashed in response to the Bank of England's Funding for Lending Scheme that started in July 2012.
| Halifax ISA's | May 2012 | Sept 2012 | Nov 2012 | Mar 2013 | May 2013 | July 2013 | Mar 2014 | June 2014 | Mar 2015 | % Cut |
|---|---|---|---|---|---|---|---|---|---|---|
| Instant Access | 3% |
2.75% |
2.35% |
1.75% |
1.35% | 1.35% | 1.5% | 1.30% | 1.05% | -65% |
| 1 Year Fix | 2.25% |
2.05% |
2.05% |
1.75% | 1.75% | 1.65% | 1.5% | 1.40% | -38% | |
| 2 Year Fix | 4.00% |
3.25% |
2.25% |
2.5% |
2.10% | 2.10% | 2.05% | 1.8% | 1.65% | -59% |
| 3 Year Fix | 4.25% |
3.75% |
2.35% |
3.00% |
2.25% | 2.25% | 2.25% | 2% | 1.75% | -59% |
| 4 Year Fix | 4.35% |
3.80% |
2.40% |
3.05% |
2.30% | 2.30% | 2.40% | 2.10% | 1.85% | -57% |
| 5 Year Fix | 4.50% |
4.15% |
2.60% |
3.10% |
2.35% | 2.35% | 2.5% | 2.20% | 2.00% | -55% |
The table shows that the tax payer bailed out Halifax continues to across the board pay abysmally poor rates of interest that are far below the official UK RPI Inflation rate of 2.24% (average of the last 12 months).
Current Best Cash ISA
In my opinion the current best ISA's are the 2 year fixed Cash ISA's from Clydesdale / Yorkshire bank paying 2.10% (in branch only). For those wishing to gamble on rates being held low for 5 years then there is the United Trust 5 year fixed rate ISA paying 2.3%, though it is nowhere near as appealing as it was just 3 weeks ago when it was paying 2.75% (transfer in's only). Whilst Coventry BS pays 2.25% on their 4 year ISA, and as for instant access the Skipton BS pays 1.6%.
Remember to act fast because the interest rates are dropping fast as the banking syndicate seeks to milk zero inflation to their advantage.
New ISA Rules
Some good news for ISA savers to look forward to later this year will be the change that will allow savers to withdraw and re-deposit funds into the current years ISA account without effecting the current tax years ISA allowance.
Junior ISA's
One way of beating the savings interest rates drought is by parents depositing cash into their children's Junior ISA's that typically pay over 3% per annum (Coventry BS 3.25%).
The Great Cash ISA Rip Off Continues
Most banks, large and small keep playing the game of paying LESS on ISA accounts than for the same term NON ISA accounts i.e. Shawbrook pays 1.95% on its 2 year ISA bond whilst paying a higher 2.20% on its non ISA 2 year bond. Another is Aldermore that on a three year fixed rate bond pays 2% on an Cash ISA whilst paying a higher rate of 2.15% on a Non ISA.
Do these banks not comprehend how infuriating such bad practices are? Customers get the impression that most of their tax free interest that 'should' be due is being siphoned off for no real justification other than banker greed. Thus depositors as a rule should avoid those banks that engage in such practices as it is the only way the banks will take notice and change such behaviour.
By Nadeem Walayat
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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 five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 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
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