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Is a Fixed or Variable ISA Best for 2011

by Jim ONeil on May 18, 2011

in ISA's Individual Saving Accounts

This is a great question, but the answer is really up to the depositor. Every situation is different and the answer depends on what exactly the depositor needs and expects from his or her ISA account. Here is some basic information that should make the decision a bit easier when choosing what type of ISA accounts to open.

A fixed rate ISA will usually offer a higher interest rate, but the terms are more restrictive. That extra earning potential will require the account to come to maturity before the interest is actually available in the account.

This does not mean the interest will not show in your account statements.

However, if there is an attempt to close out the account early, any interest earned will more than likely be forfeited.

Variable rates offer a lot more flexibility, but also tend to have lower interest rates. If a person is unsure of their financial situation and feels as though they may need to withdrawal their money, this is definitely the better option.

Generally speaking, the account will keep accumulating interest until notice has been given of closure. At that point, the account will lose its ability to earn interest, but will be available after the waiting period is over.

As we always do, we recommend that all terms and conditions of the account be gone over thoroughly regardless if it is a variable or fixed rate. The advice we give here is based on the norm, but every provider sets different rules for their accounts.

Make sure you read all the fine print before committing your funds into an account so you know exactly where you are putting your money.

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