A quick ISA question

Voy06 · 25 Apr 2012 at 21:36

Maybe a stupid question but I don't know. If for example I took out a 2yr fixed rate ISA at 4% does that mean that I will get 4% interest in each year or is it 2% each year giving you the total of 4% over the the 2yr period?

I have never even thought about this before until a friend told me it was the latter. I always thought it would be 4% each year.

Many thanks.

[TW]Fox · 25 Apr 2012 at 21:37

The 4% is APR - so yearly.

Andr3w · 25 Apr 2012 at 22:00

Yes it is yearly.

Mercenary Keyboard Warrior · 25 Apr 2012 at 22:39

APR = annual percentage rate

You didn't actually quote its 4% APR but its 99.999999999% likely it is

One · 25 Apr 2012 at 22:43

4% is quite good, make sure there are no withdrawal clauses, and if they are they won't be a problem for you.

The Halk · 25 Apr 2012 at 22:43

If you're given any rates at all they should be AER rates (almost the same as APR). It's extremely unlikely you would be quoted a 2 year rate. The FSA is quite strict about providers giving misleading rates, so the days of that are gone - however you sometimes see it on investments.

Mercenary Keyboard Warrior · 25 Apr 2012 at 22:46

2 year fixed rate will either specify no withdrawls or a punative interest loss for doing so (eg 90 days penalty interest)

To be honest I would seriously consider the 3.3% Santander ISA thats got absolutely no lock in.

djkav · 25 Apr 2012 at 23:18

In a 2 year fixed ISA, can you contribute in the 2nd year?

AndrewNR · 25 Apr 2012 at 23:38

djkav said:
In a 2 year fixed ISA, can you contribute in the 2nd year?

Up to 11,200 a year I think.

[TW]Fox · 25 Apr 2012 at 23:45

AndrewNR said:
Up to 11,200 a year I think.

No, £5600 a year for a cash ISA.

Richie · 26 Apr 2012 at 05:54

Well, actually it is £5,640 in a cash ISA for this year... Come on Fox, you're slipping