Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

UK Banks Such as Halifax (HBOS) Underpaying Cash ISA Saving Account Interest Rates

Interest-Rates / ISA's Jan 18, 2010 - 12:53 AM GMT

By: Nadeem_Walayat

Interest-Rates

Best Financial Markets Analysis ArticleThe tax payer bailed out bank Halifax (HBOS), which was forced into a shotgun wedding with Lloyds TSB in Sept/Oct 08 to prevent nationalisation, the combined group later going on to become defacto nationalised as the HBOS exploding mortgage book shredded Lloyds TSB's balance sheet to pieces, illustrates the consequences of an artificial banking system as borrowers and savers pay the ultimate price of bailing out the banks.


HBOS is presently offering 2 year fixed rate savings accounts to its customers.

The 2 year fixed rate Web saver paying 4.2% AER

The 2 year fixed rate Cash ISA paying 3.50% AER

Why is the majority government (tax payer) owned bank under paying TAX FREE accounts by 21.5% ?

The tax charged on savings is 20% for most tax payers that fall into the basic rate tax band. Therefore not only are CASH ISA savers not getting ANY of the TAX FREE BENEFITS but are in fact GETTING LESS than for virtually an identical NONE tax free savings account.

What does this imply ?

It implies that the GOVERNMENT apparently does NOT want people to utilise tax free savings accounts, it WANTS people to PAY Taxes and hence opt for the TAXABLE Accounts in advance of TAX RISES in the next financial year.

At this point in time the only winners are the NON TAX PAYERS, as they can get the full 4.20% interest tax free as under the circumstances they would LOSE money by depositing into the CASH ISA equivalent.

Unfortunately the practice of short changing Cash ISA savers is widespread across the whole UK banking sector where virtually ALL banks pay significantly less on tax free accounts when compared with their taxable savings accounts which negates virtually all of the tax free benefits of the Cash ISA savings accounts.

This IS as a consequence of Tax Payers bailing out the bankrupt banks that instead of competing in an open free market banking system instead suckle at the teat of the Bank of England for liquidity flows at a rate of just 0.5% and only marginally higher in the interbank market, whilst the tax payers, borrowers and savers are pick up the bill in the form the of the spread between interest rates as the following graph illustrates the spread between the rate the banks borrow from the Bank of England and the interbank market and the SVR rate charged to mortgage customers.

The only way Britain can have a market based banking system is if tax payer support of the banks that allows them to enjoy huge profit margins is removed, for if any of the banks cannot compete then they have no place to continue being in business at the detriment of the borrowing and saving British public and tax payers.

UK Interest Rates Forecast 2010 and 2011

Market interest rates are already on a climb, especially for borrowers with even savings rates recently perking up. I expect the Bank of England to play catch-up mid 2010, with small baby step increases so as not to offer too much distress to the infant like banks as it weans them off excess liquidity. Last weeks in-depth analysis and forecast for UK interest rates for 2010 and 2011 concluded :

UK Interest Rates Forecast 2010-11: UK interest Rates to Start Rising From Mid 2010 and Continue into end of 2010 to Target 1.75% / 2%, Continue Higher into Mid 2011 to Target 3%.

For the full implications of the interest rate trend forecast, read the full analysis here.

Source: http://www.marketoracle.co.uk/Article16561.html

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 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 specialises on UK inflation, economy, interest rates and the housing market . Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 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

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

DH
18 Jan 10, 16:14
ISA's

The banks have always dipped their hand into the ISA's, clearly the greedy $£"%^*s believe they have a right to a slice of you tax free interest, they want their cut, like the organized criminals they are.

Granted under the current circumstances they are shall we say "ripping the arse out of it" but it has alsways been a feature of their practices, to take their cut.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in