Is this usual for a fixed-term cash isa?

[jellojillo]

A few weeks ago I opened a Nationwide Fixed Rate Isa with some money that I had at the time. I knew it was a 1 year fixed rate, so I wouldn't be able to withdraw the money. But I expected to be able to add to it, and have just realised that I can't, because one of the conditions is: "Once you have paid in money to open your account you cannot make any additional payments into the account."

Is this restriction unusual?

It's certainly annoying. As this is a cash ISA, I'm not allowed to open another cash ISA this tax year, so if I want to use more of my ISA allowance I will have to use a Stocks & Shares ISA instead, which I don't currently want to do.
I also can't close the ISA without incurring a penalty charge, and it's not clear to me whether I can transfer it either (I will need to call them about that, to check).

Some do allow additional payments, others don’t. Some allow transfers in, others don’t. I’ve been doing my Moneysavingexpert research because I’m about to open one too.

You usually have 14 days to pay in to a fixed issue.. I have never had one where you could only make one payment in.

Definitely normal for fixed rate.

I would check the T&C's of the account - not sure who you bank with but I can view the letters I received when I opened mine in my online banking app. You should have been sent a copy of these when you opened the ISA.

I'd have a look at high yield savings accounts and open one of those instead for the remainder of a balance you want to put in (if it doesn't tip you over the taxable amount and negate a benefit). My savings account has a very similar interest rate to my fixed rate ISA but with much more preferable terms of access and making deposits.

A cash isa is different to a fixed isa. A cash isa is one you can regularly deposit into, up to the allowance of £20. A fixed isa has better rates but once the money is in it can’t be added to after 14 days. These are the usual terms, it sounds like you opened a fixed when you should have opened a cash.

The fixed isa is just a type of cash isa, (so not different to a cash isa).

It is normal yes. I tend to save through the year into the higher interest regular saver accounts and then move it to a fixed rate ISA towards the end of the tax year. Martin Lewis has a really useful calculator for the penalty charges if you do want to move it.

Hi OP, I've had a few Nationwide cash ISAs over the years, definitely do as others have advised and check the terms and conditions of your particular product to see if you can pay into your fixed-rate ISA for a limited time after opening. I've renewed various fixed-rate ISAs with various providers over the last few months and one said I could add in additional money for 14 days, one said 30 days and I think one even said 60 days, I forget which provider said what though.

I think another option would be to open another cash ISA with the Nationwide for the rest of this year's allowance. Normally with other providers you cannot do this, but Nationwide set their ISAs up in a particular way that means you can open more than one ISA with them in a tax year without breaking the rules. They don't seem to publicise this very much but I knew I'd opened more than one ISA per tax year with them in the past. I've done a bit of searching round their website and from their "How to transfer your cash ISA page" it says:

"As the Nationwide cash ISA is a portfolio ISA you can hold more than one Nationwide cash ISA product within your portfolio. You can then split your allowance between the products."

Then I checked the general cash ISA terms and conditions I received from my most recent Nationwide ISA, clause 15 says:

"Subject to any limits or rules imposed by HMRC, you can put all your annual ISA allowance into one of our cash ISA products or split it across two or more of our cash ISA products provided that the amount you pay in does not exceed your annual ISA allowance when added together across all your cash ISA products."

So if you wanted to you could open, say, an easy access ISA with Nationwide for the rest of this tax year and pay into it as and when you are able to, then transfer it into a fixed rate next tax year to take advantage of better rates.

This is useful, thanks. I thought I had checked the T&C's but will do so again. I did notice that they're not flagging last year's ISA as closed to payments, so I will phone and ask them if it counts as one isa or two if I pay into that.

Yes normally with a fixed interest account you can only add in first 14 days or so sometimes a month, very normal, check ts and Cs. You won't be able to add to last year's either as you've opened another this year. Try phoning them and see if can add to.

I had this with another bank, it blocked me adding more online but as it was early on they let me phone and add the rest. I hadn't realised they would block within the opening period online.

Yeah that's normal for fixed rate accounts, usually 14 day period to pay in. Isas are not usually the best interest rates around though, so you could just use a non isa savings account and forgo the tax free part of the interest if you are over your annual limit already?

I think another option would be to open another cash ISA with the Nationwide for the rest of this year's allowance. Normally with other providers you cannot do this, but Nationwide set their ISAs up in a particular way that means you can open more than one ISA with them in a tax year without breaking the rules. They don't seem to publicise this very much but I knew I'd opened more than one ISA per tax year with them in the past. I've done a bit of searching round their website and from their "How to transfer your cash ISA page" it says: "As the Nationwide cash ISA is a portfolio ISA you can hold more than one Nationwide cash ISA product within your portfolio. You can then split your allowance between the products."

@Treeballarae thankyou so much! This was the key piece of information I needed. I called Nationwide and they confirmed it is true.

It means I can put the remainder of my ISA allowance into last year's ISA. Then, as transfers are allowed, I can transfer the whole of last year's ISA into this year's product to get the best rate. So I'm happy now. 🙂