Best Cash ISA for Crash / Collapse in UK Savings Interest Rates
Personal_Finance / ISA's Aug 06, 2016 - 07:19 AM GMTBy: Nadeem_Walayat
The Bank of England slashing UK interest rate from 0.5% to 0.25% in a panic to save its always teetering on the edge of bankruptcy bankster brethren from going bust again and to monetize government debt by means of quantitative easing, the smoke and mirrors phrase used for the Bank of England to print another £170 billion mostly for its banking sector friends to gorge themselves on, to generate additional artificial profits. The net effect of this 'THEFT' of purchasing power is that the price savers and workers have already been paying for 8 years has just gotten a lot worse!
So where do savers stash their cash in a time when the name of the game is to steal purchasing power of savings. In fact the big banks have begun to announce that they intend on going one step further, which is for outright theft of customer deposits by means of applying a negative interest rate on credit balances! Which means for instance if you have temporarily parked say £400k towards buying a property then at least 1% or £4k of that deposit could be transferred into the coffers of a member of the banking crime syndicate.
More on the game the Bank of England is playing in the following video analysis on the war on cash and what it means for your savings!
UK Best Cash ISA - August 2016
This years tax free cash ISA allowance is £15,240. So if you have not already utilised it then here are the current best rates in a world gone mad where savers are punished and borrowers are rewarded.
Firstly, my usual analysis to illustrate the magnitude of the collapse in ISA savings interest rates has hit a brick wall because Halifax have withdrawn virtually all of their fixed rate accounts. However, to continue with this long standing series for when longer duration fixed rates return, I have applied the percentage change on the 1 year fixed rate to fixes for preceding longer duration terms to illustrate what has happened to the UK savings market.
| Halifax ISA's | May 2012 | Sept 2012 | Nov 2012 | Mar 2013 | May 2013 | July 2013 | Mar 2014 | June 2014 | Mar 2015 | April 2016 | Aug 2016 | % Cut |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Instant Access | 3% |
2.75% |
2.35% |
1.75% |
1.35% | 1.35% | 1.5% | 1.30% | 1.05% | 0.60% | 0.40% | -87% |
| 1 Year Fix | 2.25% |
2.05% |
2.05% |
1.75% | 1.75% | 1.65% | 1.5% | 1.40% | 0.90% | -60% | ||
| 2 Year Fix | 4.00% |
3.25% |
2.25% |
2.5% |
2.10% | 2.10% | 2.05% | 1.8% | 1.65% | 1.25% | 1.06% | -73% |
| 3 Year Fix | 4.25% |
3.75% |
2.35% |
3.00% |
2.25% | 2.25% | 2.25% | 2% | 1.75% | 1.125 | -73% | |
| 4 Year Fix | 4.35% |
3.80% |
2.40% |
3.05% |
2.30% | 2.30% | 2.40% | 2.10% | 1.85% | 1.19% | -72% | |
| 5 Year Fix | 4.50% |
4.15% |
2.60% |
3.10% |
2.35% | 2.35% | 2.5% | 2.20% | 2.00% | 2.00% | 1.28% | -71% |
Again note ONLY the 1 year fix is currently available from the Halifax and the table will be updated when longer duration fixes return.
Having trawled many ISA issuers that like the Halifax ALL offer less than 2% for multi-year fixes, the only bank that really stands out is Julian Hodge's 4 year offering fixed at 1.85%! Yes that's a very long time for a sub 2% rate but this is the dire state of Britain's savings market where to get a half way decent rate one needs to fix for FOUR YEARS! Yes I know there are others that pay marginally more such as the Indian banks where the problem is one has to visit a distant branch, for what? an extra £15 per year? And similar holds true for other providers with their obnoxious small prints trying to hide the game they are playing with savers.
- Easy Access - Coventry Building Society 1.3%, down from 1.4% with probably more cuts to come.
- 1 Year Fix - Kent Reliance 1.10% cut from 1.45%
- 2 Year Fix - Leeds BS 1.40%
- 3 Year Fix - Shawbrook 1.70% down from 2.15%.
- 4 Year Fix - Julian Hodge Bank 1.85%
- 5 Year Fix - Shawbrook 1.90% down from 2%
Yes, I know the rates are all pretty rubbish, but what can one do? This is what happens when the Bank of England supports its banking brethren for 8 years with printed money! all backed by Britain's tax payers. The solution of course is to invest in assets that are LEVERAGED to central bank money printing, such as housing and stocks as I have covered extensively in many articles and videos.
So maybe now really is the time to forget about putting any more money into Cash ISA's and focus on investing and perhaps consumption, and not forgetting if your mortgage rate is above 2% then you should pay that down FIRST! Other alternatives are to top up your pension, after all the tax man will give you an instant 20%+. Have Cash ISA savers considered the stock market? Perhaps the time has come to open a stocks and shares ISA, something to ponder as many dividend yields are HIGHER than fixed rate bond rates!
For more post BrExit analysis implications see the following 2 articles -
- BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics...
- BrExit Implications for UK Economy, Interest Rates, Bonds, Markets, Debt & Deficit, Inflation...
And my most recent video on UK house prices -
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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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