"Norman Wells" wrote in
message ...
Andy Pandy wrote:
"Norman Wells" wrote in
message ...
Andy Pandy wrote:
"Norman Wells" wrote in
message ...

I wonder about that. If you take cash ISAs as an example of tax
free savings, all that's happened is that the banks and building
societies offer those at rates lower than any corresponding
non-ISA account.

Do they? I've got a regular saver ISA paying 7% with FD, they
weren't offering a regular saver non-ISA paying 11.74% or even
8.75%.

If you take Halifax just as an example, their current cash ISA
fixed
rates for 2, 3 and 4 years are 3.5, 3.75 and 4.25%. The
corresponding rates for 2, 3 and 4 year fixed rate term bonds not
in
an ISA are 4.0, 4.25 and 4.5%. OK, you'll get back slightly more
from the ISAs than you would
from the term bonds after basic rate tax, but why are the gross
rates
consistently lower on the ISAs? It can only be that the bank is
taking or 'sharing' what the government intended should really be
yours. That's unfair, disreputable and underhand in my view.

"Only"? There might be extra admin involved for ISAs. Or more
likely
there is a behavioural difference in investors - eg for bonds they
might account for the likelyhood of early closure, or average
investment, which may be different for ISAs.

I doubt that there is any extra administration involved with ISAs,
or that there is any real reason to give different rates of interest
on what would otherwise be totally equivalent accounts.


For instant access accounts, ISAs pay pretty much the same if not
more
interest than the equivalent non ISA account, eg First Direct are
offering an ISA at 2.5% for a year, instant access. Their best
offering for non-ISA instant access is 0.25% gross. They've always
offered better rates from ISAs - the difference is nothing to do
with
tax but an expected behavioural difference, people don't tend to
use
ISAs as instant access even if they can - they tend to invest and
leave. And the interest rate drops after a year (when sensible
people
transfer out).

Indeed. It's a sprat to catch a mackerel. I don't think you can
properly compare rates that include a hefty, temporary bonus, which
is why I thought it more realistic to select the longer term
accounts I did.

Compare non-bond accounts then. OK these day most pay FA, but when we
had reasonable interest rates ISA accounts were paying much the same
as non-ISAs.

--
Andy

Andy Pandy wrote:
"Norman Wells" wrote in
message ...

Indeed. It's a sprat to catch a mackerel. I don't think you can
properly compare rates that include a hefty, temporary bonus, which
is why I thought it more realistic to select the longer term
accounts I did.

Compare non-bond accounts then.

Why? I think a lot of people, myself included, look on ISAs as a fairly
long-term investment, ie somewhere to put money aside and preserve its
tax-free status. It seems sensible therefore to compare term accounts that
pay higher rates than instant access ones. Moreover, term accounts are
about the only ones you can compare directly these days. Most banks seem to
be set on a deliberate course to confuse investors with all sorts of odd
terms, introductory rates valid for some period etc, so that no two accounts
are directly comparable.

OK these day most pay FA, but when we
had reasonable interest rates ISA accounts were paying much the same
as non-ISAs.

Well, I'm just speaking from my experience this tax year, when I've
consistently found that I could get more back after tax from a taxable
account than I could from an ISA. I've just invested in a cash ISA for
09/10 because there are only opportunities now to get a slightly higher
return from it than from a taxable fixed term bond. Normally, I'd invest at
the start of the tax year to have the tax benefit for longest.

On Sat, 30 Jan 2010 08:52:23 +0800, Chris Blunt
wrote:

On Fri, 29 Jan 2010 18:25:30 -0000, "Andy Pandy"
wrote:


"mick" wrote in message
...
The Conservatives said they were going to put this in their manifesto.
Does anyone think they will
do it, if they get in? personally i doubt it.The need for tax revenue
will be overwhelming.

They probably will but I doubt it'll be a priority. Although with interest
rates so low it probably doesn't bring a lot in now. My guess is they'll
increase VAT substantially and cut a few other taxes like savings.

In view of the huge mountain of debt that many people have got
themselves into, with very little in savings, I think this is a good
idea. It would be better to cut taxes on savings to encourage people
to save more, and introduce taxes on some types of borrowing to make
it more difficult to take out unnecessary loans.

Chris

Unfortunately, it would appear that all that was talked about what was
wrong with the economy will be ignored so they can "fuel growth" or
some such rubbish. They will try to get people to borrow to spend
money on buying unnecessary rubbish.

In message , Peter Saxton
writes

Unfortunately, it would appear that all that was talked about what was
wrong with the economy will be ignored so they can "fuel growth" or
some such rubbish. They will try to get people to borrow to spend
money on buying unnecessary rubbish.

Don't look at me, I was aghast when they removed the requirement to
place a one-third deposit on retail goods. It was still called Hire
Purchase in those days.
Or "On the Never-Never".
I can't remember which government did it...

"Credit" sounds so much more respectable, doesn't it?
--
Gordon H
Remove "invalid" to reply

"Norman Wells" wrote in message
...
Andy Pandy wrote:
"Norman Wells" wrote in
message ...

Indeed. It's a sprat to catch a mackerel. I don't think you can
properly compare rates that include a hefty, temporary bonus, which
is why I thought it more realistic to select the longer term
accounts I did.

Compare non-bond accounts then.

Why?

Because as usual you seem to be selectively picking and choosing evidence to
arrive at a general conclusion that banks are ripping off ISA savers.

I think a lot of people, myself included, look on ISAs as a fairly
long-term investment, ie somewhere to put money aside and preserve its
tax-free status. It seems sensible therefore to compare term accounts
that pay higher rates than instant access ones.

So banks probably just think ISAs will be left untouched for longer.
Therefore they offer better rates for instant access ISAs as they think
customers will leave money in after the introductory high rate, but they
offer worse rates for long term ISA accounts as they think it's less likely
customers will close early and pay the interest penalty.

--
Andy

Andy Pandy wrote:
"Norman Wells" wrote in
message ...
Andy Pandy wrote:
"Norman Wells" wrote in
message ...

Indeed. It's a sprat to catch a mackerel. I don't think you can
properly compare rates that include a hefty, temporary bonus, which
is why I thought it more realistic to select the longer term
accounts I did.

Compare non-bond accounts then.

Why?

Because as usual you seem to be selectively picking and choosing
evidence to arrive at a general conclusion that banks are ripping off
ISA savers.
I think a lot of people, myself included, look on ISAs as a fairly
long-term investment, ie somewhere to put money aside and preserve
its tax-free status. It seems sensible therefore to compare term
accounts that pay higher rates than instant access ones.

So banks probably just think ISAs will be left untouched for longer.
Therefore they offer better rates for instant access ISAs as they
think customers will leave money in after the introductory high rate,
but they offer worse rates for long term ISA accounts as they think
it's less likely customers will close early and pay the interest
penalty.

Doesn't that just show that they _are_ in fact ripping off their customers?
Give them an opportunity to take some of the tax advantage that was intended
for the taxpayer, and sure as eggs are eggs they'll take it.

What I'd like to see is an end to the banks knowing whether your savings are
in an ISA or not. It's frankly none of their business. I think it's a
personal matter between you and the government, or at least it should be.
Then they'd have to compete fairly. If they offered, say, a 3 year bond,
they'd have just one rate that would have to be competitive, not a reduced
ISA rate so that the investor can have some but not all of the tax advantage
that the government intended.

"Gordon H" wrote in message
...
In message , Peter Saxton
writes

Unfortunately, it would appear that all that was talked about what was
wrong with the economy will be ignored so they can "fuel growth" or
some such rubbish. They will try to get people to borrow to spend
money on buying unnecessary rubbish.

Don't look at me, I was aghast when they removed the requirement to place
a one-third deposit on retail goods. It was still called Hire
Purchase in those days.

Hire Purchase is different to buying on credit

You have the legal right to stop paying and send the goods back with HP.

tim

"tim...." wrote
Hire Purchase is different to buying on credit

You have the legal right to stop paying and send the goods back with HP.

Isn't that only after paying half of the price?

"Norman Wells" wrote in message
...
Andy Pandy wrote:
"Norman Wells" wrote in
message ...
Andy Pandy wrote:
"Norman Wells" wrote in
message ...

Indeed. It's a sprat to catch a mackerel. I don't think you can
properly compare rates that include a hefty, temporary bonus, which
is why I thought it more realistic to select the longer term
accounts I did.

Compare non-bond accounts then.

Why?

Because as usual you seem to be selectively picking and choosing
evidence to arrive at a general conclusion that banks are ripping off
ISA savers.
I think a lot of people, myself included, look on ISAs as a fairly
long-term investment, ie somewhere to put money aside and preserve
its tax-free status. It seems sensible therefore to compare term
accounts that pay higher rates than instant access ones.

So banks probably just think ISAs will be left untouched for longer.
Therefore they offer better rates for instant access ISAs as they
think customers will leave money in after the introductory high rate,
but they offer worse rates for long term ISA accounts as they think
it's less likely customers will close early and pay the interest
penalty.

Doesn't that just show that they _are_ in fact ripping off their
customers? Give them an opportunity to take some of the tax advantage that
was intended for the taxpayer, and sure as eggs are eggs they'll take it.

Erm, WTF was what I wrote above got to do with the taxation status? It's to
do with expected investor behaviour.

What I'd like to see is an end to the banks knowing whether your savings
are in an ISA or not. It's frankly none of their business. I think it's
a personal matter between you and the government, or at least it should
be.

Yeah but the same applies to wages etc. The government likes employers,
banks etc acting as tax collectors for them because it's easier.

--
Andy