| Alliance and Leicester ISA - Another rate change... [message #390228] |
Fr, 19 Mai 2006 15:12 |
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This morning got a letter from the A&L saying that their interest rates were
changing (had changed) effective May 02 2006.
Thought they had to give me 30 days notice of any changes? Seems to say that
in the T&C.
The rate changed from 5.15% to 4.75%, used to be 5.4% when I opened, but
changed in September and decided to leave it as it was only a 0.25% drop,
and still quite competitive. This recent drop of 0.4% is huge, and in total
0.65%. There must be other 5%+ ISAs out there. Any recommendations?
Should I transfer it all, or leave in £1 in case I want to transfer it back
at another time?
Marcus
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| Re: Alliance and Leicester ISA - Another rate change... [message #390232 ] |
Fr, 19 Mai 2006 16:40 |
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On Fri, 19 May 2006 13:12:26 GMT, "Marcus Fox"
<please-reply-via-newsgroup-th [at] -i-posted-to.com> wrote:
>This morning got a letter from the A&L saying that their interest rates were
>changing (had changed) effective May 02 2006.
All the speculation is that the BoE is going to put rates up... but
several accounts are cutting theirs. Then I guess they will put them
back again with a great fanfare to suggest you are now doing better.
Tiddy Ogg.
http://www.tiddyogg.co.uk
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| Re: Alliance and Leicester ISA - Another rate change... [message #390233 ] |
Fr, 19 Mai 2006 17:27 |
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Marcus Fox wrote:
> This morning got a letter from the A&L saying that their interest rates were
> changing (had changed) effective May 02 2006.
>
> Thought they had to give me 30 days notice of any changes? Seems to say that
> in the T&C.
>
> The rate changed from 5.15% to 4.75%, used to be 5.4% when I opened, but
> changed in September and decided to leave it as it was only a 0.25% drop,
> and still quite competitive. This recent drop of 0.4% is huge, and in total
> 0.65%. There must be other 5%+ ISAs out there. Any recommendations?
>
> Should I transfer it all, or leave in £1 in case I want to transfer it back
> at another time?
>
> Marcus
>
>
4.75% looks reasonable. Remember that 0.65% interest reduction will
reduce annual interest by only £19.50 for one year's maximum deposit
(£3,000) on a mini-cash ISA.
www.moneysupermarket.com suggests that 5.05% is currently available for
an easy access ISA (National Savings "direct ISA"), but the difference
is only 0.3%.
Unless one has large sums of money (and ISA rules place strict limits on
annual deposits, so the totals involved are necessarily restricted),
chasing after the best rates may involve a lot of energy for rather
limited results.
--
Alan Law
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| Re: Alliance and Leicester ISA - Another rate change... [message #390236 ] |
Fr, 19 Mai 2006 17:49 |
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"Alan Law" <nospam [at] invalid.com> wrote in message
news:446de3b4$0$10766$ed2619ec [at] ptn-nntp-reader01.plus.net...
> Marcus Fox wrote:
> > This morning got a letter from the A&L saying that their interest rates
were
> > changing (had changed) effective May 02 2006.
> >
> > Thought they had to give me 30 days notice of any changes? Seems to say
that
> > in the T&C.
> >
> > The rate changed from 5.15% to 4.75%, used to be 5.4% when I opened, but
> > changed in September and decided to leave it as it was only a 0.25%
drop,
> > and still quite competitive. This recent drop of 0.4% is huge, and in
total
> > 0.65%. There must be other 5%+ ISAs out there. Any recommendations?
> >
> > Should I transfer it all, or leave in £1 in case I want to transfer it
back
> > at another time?
> >
> > Marcus
> >
> >
>
> 4.75% looks reasonable. Remember that 0.65% interest reduction will
> reduce annual interest by only £19.50 for one year's maximum deposit
> (£3,000) on a mini-cash ISA.
>
> www.moneysupermarket.com suggests that 5.05% is currently available for
> an easy access ISA (National Savings "direct ISA"), but the difference
> is only 0.3%.
>
And that one doesn't accept transfers in.
(apart from the previous NSandI ISA)
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| Re: Alliance and Leicester ISA - Another rate change... [message #390239 ] |
Fr, 19 Mai 2006 18:03 |
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> 4.75% looks reasonable. Remember that 0.65% interest reduction will reduce
> annual interest by only £19.50 for one year's maximum deposit (£3,000) on
> a mini-cash ISA.
Only £19.50? You're on the wrong newsgroup buddy!
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| Re: Alliance and Leicester ISA - Another rate change... [message #390241 ] |
Fr, 19 Mai 2006 19:12 |
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<nospam [at] invalid.invalid> wrote in message
news:RO-dnTeNDOnccfDZRVny2Q [at] bt.com...
>> 4.75% looks reasonable. Remember that 0.65% interest reduction will
>> reduce annual interest by only £19.50 for one year's maximum deposit
>> (£3,000) on a mini-cash ISA.
>
> Only £19.50? You're on the wrong newsgroup buddy!
>
Another matter, which I've never seen mentioned, relates to the interest you
lose during the time it takes for the transfer to occur. So, if it takes 4
days to happen, and you are going for a gain of 4.5% to 4.75%, it will take
you 18 times 4 days = 2 month plus to make up that loss, and if you keep
chasing the rates you are going to gain very little even if you don't make a
loss. Its even worse if the transfer is over a weekend, where the transfer
really takes 4+2 days. The cards are stacked against us.
GPG
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| Re: Alliance and Leicester ISA - Another rate change... [message #390242 ] |
Fr, 19 Mai 2006 19:32 |
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Alan Law wrote:
> 4.75% looks reasonable. Remember that 0.65% interest reduction will
> reduce annual interest by only £19.50 for one year's maximum deposit
> (£3,000) on a mini-cash ISA.
But the interest rate (reduction) doesn't just apply to one year's
deposit. It applies to the whole balance.
> Unless one has large sums of money (and ISA rules place strict limits on
> annual deposits, so the totals involved are necessarily restricted),
> chasing after the best rates may involve a lot of energy for rather
> limited results.
"Unless one has large sums"? Well, surely many people can have
afforded to put by (or transfer from existing non-ISA savings) the full
£3k each year since ISAs were introduced just over 7 years ago, so it is
to be expected that a high proportion of savers who have minicash ISAs
have well over £20k in all their minicash ISAs put together.
Would you not agree?
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| Re: Alliance and Leicester ISA - Another rate change... [message #390244 ] |
Fr, 19 Mai 2006 19:51 |
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GPG wrote:
> <nospam [at] invalid.invalid> wrote in message
> news:RO-dnTeNDOnccfDZRVny2Q [at] bt.com...
>>> 4.75% looks reasonable. Remember that 0.65% interest reduction will
>>> reduce annual interest by only £19.50 for one year's maximum deposit
>>> (£3,000) on a mini-cash ISA.
>>
>> Only £19.50? You're on the wrong newsgroup buddy!
>>
> Another matter, which I've never seen mentioned, relates to the interest
> you
> lose during the time it takes for the transfer to occur. So, if it takes
> 4 days to happen, and you are going for a gain of 4.5% to 4.75%, it will
> take you 18 times 4 days = 2 month plus to make up that loss, and if you
> keep chasing the rates you are going to gain very little even if you don't
> make a loss.
The arithmetic is impeccable, but the approach is flawed. No-one in their
right mind is going to "keep switching" at time intervals as short as a
few months. Hence it's always worth doing if you don't expect to (need to)
switch again within (in this case) 72 days.
If you can be assured (or confident) of a 0.25% differential for a year,
then it's worth switching because (365-4)*4.75 is better than 365*4.5,
or, put another way, 361*0.25 is better than 4*4.5.
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| Re: Alliance and Leicester ISA - Another rate change... [message #390252 ] |
Sa, 20 Mai 2006 10:35 |
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> This morning got a letter from the A&L saying that their interest rates
> were
> changing (had changed) effective May 02 2006.
>
> Thought they had to give me 30 days notice of any changes? Seems to say
> that
> in the T&C.
>
Listen to Radio 4 Money Box at midday today (Saturday). There is a article
on there about a finance company reducing rates and only telling customers
30 days after.
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| Re: Alliance and Leicester ISA - Another rate change... [message #390258 ] |
Sa, 20 Mai 2006 12:01 |
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Ronald Raygun wrote:
> Alan Law wrote:
>
> //snip//
>
>>Unless one has large sums of money (and ISA rules place strict limits on
>>annual deposits, so the totals involved are necessarily restricted),
>>chasing after the best rates may involve a lot of energy for rather
>>limited results.
>
>
> "Unless one has large sums"? Well, surely many people can have
> afforded to put by (or transfer from existing non-ISA savings) the full
> £3k each year since ISAs were introduced just over 7 years ago, so it is
> to be expected that a high proportion of savers who have minicash ISAs
> have well over £20k in all their minicash ISAs put together.
>
> Would you not agree?
>
Yes, I would agree - my statement "Unless one has large sums ....
chasing after the best rates may involve a lot of energy for rather
limited results" acknowledges that the results could be productive for
those with larger deposits. Those who started in 1999 could well have
£28k on deposit by the time interest is added.
The issue is the balance between extent of gain (allowing for any
transfer charges and days lost) and workload. The comment in RR's other
post "No-one in their right mind is going to 'keep switching' at time
intervals as short as a few months" seems to summarise correctly the
practicality of it all. RR's further observation "If you can be assured
(or confident) of a 0.25% differential for a year, then it's worth
switching ........" reveals an underlying problem - on what basis can
anyone be confident of a useful differential for an extended period?
--
Alan Law
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| Re: Alliance and Leicester ISA - Another rate change... [message #390260 ] |
Sa, 20 Mai 2006 13:08 |
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Alan Law wrote:
> Ronald Raygun wrote:
>>
>> Would you not agree?
>
> Yes, I would agree - my statement "Unless one has large sums ....
> chasing after the best rates may involve a lot of energy for rather
> limited results" acknowledges that the results could be productive for
> those with larger deposits.
Indeed it does, though I thought I detected an unstated assumption
on your part that you would regard larger deposits as very much the
exception.
I'd have thought they'd be more like the rule. Even if not, for people
with only small deposits, the same argument applies: the difference
between keeping them in an ISA and in an ordinary savings account
isn't going to be huge.
> The issue is the balance between extent of gain (allowing for any
> transfer charges and days lost) and workload.
Perhaps, but filling in a form is hardly enough workload to make you
forego the pleasures of an evening out. Or do you mean keeping on top
of the research? No need - just keep your ear to the ground - subscribe
to uk.finance and you'll be automatically alerted to any good deals
coming up. :-)
> The comment in RR's other
> post "No-one in their right mind is going to 'keep switching' at time
> intervals as short as a few months" seems to summarise correctly the
> practicality of it all. RR's further observation "If you can be assured
> (or confident) of a 0.25% differential for a year, then it's worth
> switching ........" reveals an underlying problem - on what basis can
> anyone be confident of a useful differential for an extended period?
This could indeed be problematic, but experience tends to show that over
the longer term most deposit takers tend to follow BoE base rate changes,
and don't change their relative differentials too often.
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| Re: Alliance and Leicester ISA - Another rate change... [message #390277 ] |
So, 21 Mai 2006 13:18 |
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"Ronald Raygun" wrote
> ... experience tends to show that over the longer term
> most deposit takers tend to follow BoE base rate changes,
> and don't change their relative differentials too often.
.... except for those outfits that keep constant/reduce
the rates for existing customers, and introduce
new higher rates for "New Customers Only!".
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| Re: Alliance and Leicester ISA - Another rate change... [message #390289 ] |
So, 21 Mai 2006 18:31 |
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Alan Law wrote:
<snip>
> Those who started in 1999 could well have
> £28k on deposit by the time interest is added.
>
<snip>
Or well-upward of £37k once matured TESSA capital is added.
Aside: Doesn't this make it very difficult for the government ever to
implement its much-postponed slashing of the annual cash contribution
limit to 1k, without howls of protest from those yet to start accumulating?
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| Re: Alliance and Leicester ISA - Another rate change... [message #390314 ] |
Mo, 22 Mai 2006 11:45 |
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> Listen to Radio 4 Money Box at midday today (Saturday). There is a
> article on there about a finance company reducing rates and only telling
> customers 30 days after.
With such stringent financial laws and rules in place, how does this happen?
I got my letter from A&L on 20th May saying that the rates had changed on
the 2nd May.
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| Re: Alliance and Leicester ISA - Another rate change... [message #390317 ] |
Mo, 22 Mai 2006 12:04 |
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"Tim" <me [at] home.uk> wrote in message news:xemdnZgd8MUr0e3ZRVnyvQ [at] bt.com...
> "Ronald Raygun" wrote
>> ... experience tends to show that over the longer term
>> most deposit takers tend to follow BoE base rate changes,
>> and don't change their relative differentials too often.
>
> ... except for those outfits that keep constant/reduce
> the rates for existing customers, and introduce
> new higher rates for "New Customers Only!".
Yes, this has always been my main gripe with Alliance and Leicester.
They seem to have this awful money-making "stategy" of putting a fractional
best rate up front in the market place to grab attention, then 6 months
later, reduce it back down and then quietly as a mouse, possibly with the
excuse of an "administrative error", sending out letters (consistently) late
explaning that rates have "changed" (always downwards), until the more
intelligent customers (who are unfortunately, the minority, hence why the
strategy works), decide that enough is enough and move elsewhere.
In the meanwhile they "issue" several new rates, again fractionally the
best, to keep a new stream of customers coming in, and to make them seem
like the permanent leaders in the field.
I find this strategy absolutely shameful and utterly disrespectful to
existing loyal customers. But the problem why this seems to be a rather
standard business practice is that not enough people notice it, complain or
do anything about it - not even enough people leave them in droves when the
rates reduce, and so it works, and I guess they must be doing rather well
and are probably quite chuffed with themselves.
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| Re: Alliance and Leicester ISA - Another rate change... [message #390319 ] |
Mo, 22 Mai 2006 12:28 |
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Marcus Fox wrote:
> The rate changed from 5.15% to 4.75%, used to be 5.4% when I opened, but
> changed in September and decided to leave it as it was only a 0.25% drop,
> and still quite competitive. This recent drop of 0.4% is huge, and in
> total 0.65%. There must be other 5%+ ISAs out there. Any recommendations?
Bradford and Bingley are still at 5% for their eSavings ISA.
--
Jeremy Sanders
http://www.jeremysanders.net/
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| Re: Alliance and Leicester ISA - Another rate change... [message #390323 ] |
Mo, 22 Mai 2006 12:57 |
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> > Listen to Radio 4 Money Box at midday today (Saturday).
> > There is a article on there about a finance company
> > reducing rates and only telling customers 30 days after.
>
<nospam [at] invalid.invalid> wrote
> With such stringent financial laws and
> rules in place, how does this happen?
>
> I got my letter from A&L on 20th May saying
> that the rates had changed on the 2nd May.
Isn't that within their Terms&Conditions?
[Do they say: "Within 30 days"?]
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