Stupid questions about fixed rate cash ISAs

bazzabear · 8 Dec 2023 at 16:11

OK, here goes. Hypothetically, you have a 2 year fixed ISA at x%, and you have put the maximum into it - £20k.

Say you reach April and interest rates have dropped. You have a new ISA allowance, can you put another £20k into that same ISA and get the same interest rate for the following year?

If you reach April and interest rates have risen, you would choose to put the £20k into a new ISA I guess. Would you also transfer this £20k to said new ISA (assuming that the increase in rate would more than balance out the loss from whatever the stipulations are with the fixed rate?

Now, a little further down the line, you reach the end of the 2 year fixed period. Presumably the rate reverts to standard variable, but the money stays in that ISA until you choose to do something else with it? And can that something else be transferring to a new ISA without using your allowance for the year up?

Cheers for any advice!

413x · 8 Dec 2023 at 16:37

I thought most fixed rate isas only allow one deposit/transfer in.

Its why I've not gone for one.

darkgen · 8 Dec 2023 at 16:37

Fixed means fixed interest and fixed investment. You cannot add to an existing fixed term account. You can only invest in to a new ISA, at whatever rates are offered, within the current financial years allowance or the full 20k the following financial year.

throwaway4372 · 8 Dec 2023 at 16:42

nvm misunderstood.

This sort of thing is why I'd never do a cash isa, always stocks and shares isa, miles better.

darkgen · 8 Dec 2023 at 16:49

throwaway4372 said:
nvm misunderstood.

This sort of thing is why I'd never do a cash isa, always stocks and shares isa, miles better.

I do both and at least while the interest are back to a somewhat normalised average it removes the risk of S&S (although my S&S portfolios are finally starting to see some good returns after a few lean years).

Hagar · 8 Dec 2023 at 16:50

We did a variable rate cash ISA last March and we're able to add to it in April. The rate was originally 2.5% but recently hit 5%.

bazzabear · 8 Dec 2023 at 16:56

darkgen said:
Fixed means fixed interest and fixed investment. You cannot add to an existing fixed term account. You can only invest in to a new ISA, at whatever rates are offered, within the current financial years allowance or the full 20k the following financial year.

Aha! Thank you very much.

bazzabear · 8 Dec 2023 at 16:58

So do they revert to variable rate after the fixed period? And at that point I could combine existing ISAs if desired?
Or do you have to empty them at the end of the period?

a1ex2001 · 8 Dec 2023 at 21:34

bazzabear said:
So do they revert to variable rate after the fixed period? And at that point I could combine existing ISAs if desired?
Or do you have to empty them at the end of the period?

At the end of the fixed period they will revert to some terrible rate set by the bank. You then have the choice of selecting a new product with that bank for a better rate or moving your money elsewhere, check the small print on your isa some scummy ones charge a fee to transfer after the fixed rate but it is pretty rare these days.