transferring cash isa from one provider to another(9 Posts)
The interest rate on my cash isa has dropped because I've had it over a year, so I want to transfer to another provider to get a better rate. However, when I tried to do this online the new provider wanted me to open the new cash isa by putting in a minimum of £1, before transferring the other isa across. So this would mean by paying £1, I'd then not be allowed to contribute any cash to another cash isa this year? (If I do want to invest some cash, there are some paying higher rates that don't accept transfers, otherwise I'd keep it simple by putting cash plus the existing isa in the same fund). Has anyone else come across this problem?
I could be wrong, but unless that particular ISA restricts you to paying in only once, you should be able to make multiple pay ins provided you don't exceed the yearly limit.
thanks chopchop (love the name) - yes, that may be right, it's just I'm not sure if I was paying cash in that I'd want to pay it into that particular ISA if there was a better rate with someone else (maybe a provider offering a cash ISA that you can't also transfer ISAs from previous years into). I'm just going by the list of interest rates on the martin lewis website - the top rate ones don't seem to allow transfers, you have to go a bit further down the list to get ones that do. I thought I could pick an ISA for the transfer (as it doesn't affect my limit this year) and I'd just pick the highest rate cash ISA that allows transfers. Then if I can scrape together enough cash to make it worthwhile, and soonish, I'd pick the highest rate cash ISA, assuming it's probably going to be one that doesn't allow transfers (otherwise I'd just pick one for both actions and be done with it). I didn't explain that very well....
Once you've paid your £1 to open the ISA then that's your 2011/2012 ISA and you can't open another one this financial year. However, if they allow transfers, you can transfer all the money from your old ISA into the new one in its 'ISA wrapper' and that doesn't count towards your 2011/2012 deposit limit. You can then go on to add to your new ISA up to the maximum... not forgetting, of course, that you've already deposited £1.
Alternatively, you leave your old ISA where it is. Open a completely new one at the highest rate you can find and then deposit money in that. You end up with two ISAs... one with a great interest rate and one with a poor interest rate ... rather than one middling-paying ISA. You have to do the maths to see which is the best option
There's some useful info on ISA transfer of the BBA's website:
you should be able to transfer it without opening it as a new subscription for the current year - unless that particular provider doesn't accept transfers only.
Who is the new one you want to open with?
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If the rate drops on your cash ISA, as many do, after an initial bonus rate, then you need to shop around to transfer it to a new provider - one that accepts transfers in.
Do not as many of my friends have done close the account and take the cash out - that means you have lost that tax-free status on that money.
You can still open a new one for this year (I just opened one for Cheshire today, at 3.5%) and I just need to remember to flip it after the bonus rate drops in a year.
But for my older Cash ISAs I need to flip them into a better fund, as they are all getting varying rates of interest, so it's hard to keep track of them (and this is with me trying my hardest to do so). So I will flip them into a better deal to keep it in 1 place, easier to manage etc.
It's even more confusing now with Junior ISAs - I have Child Trust Funds my my 2 kids, so I need to check what rate they are getting (I have NO idea!), then see if I should just stop funding them and open Junior ISAs for the kids... it's a nightmare to manage. There is talk on the government being pressurised to allow old Child Trust fund accounts to be migrated/transferred into a Junior ISA, which is meant to offer better rates, so that's what I need to look into next.
I hope this helps people, I just wanted to share what I am going through at this very moment in time!
There's no guarantee that Junior ISAs offer better returns than Child Trust Fund accounts. If both are invested in stocks and shares, they can't offer a particular 'rate' (fixed interest level)... the performance will always vary. Any child that has a CTF is automatically £250 better off than a child that didn't qualify.
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