Nationwide cash ISA transfer - interest allowance

sat_mad

I currently have a Nationwide cash ISA which I'm looking to transfer to another provider.

I'm presuming (rightly or wrongly) that the accrued interest will be paid by Natiowide during the process even though the advertised interest payment date is 31st March.

As tax free allowance has been fully used for this year, does anyone know if the added interest payment will cause problems as this will take the total amount over the £3,600 limit?

KingL

Yes, you will receive the interest acrued to date.

Interest earned from the ISA (and paid directly into the ISA) won't hurt your annual allowance. You will be able to transfer more than the £3600.

martinman3

Interestingly, if you transfer a Nationwide Instant Access ISA to a Nationwide Fixed Rate ISA the interest gained so far is not credited at the date of transfer. As said previously, on a transfer it is normal for the balance including interest earned to date to be transferred.

I am assuming that it is credited to the Fixed Rate ISA on 31st March which benefits the Nationwide as this, as yet unpaid, interest cannot itself earn interest at the fixed rate from date of transfer until 31st March.

The Yorkshire Building Society has done the same when transferring ISAs internally calling it a product migration.

I just need to check after 31st March that it has been added correctly.

sat_mad

Thanks for your replies - very appreciated.

You confirm my suspicions!

loulou41

martinman3 wrote: »

Interestingly, if you transfer a Nationwide Instant Access ISA to a Nationwide Fixed Rate ISA the interest gained so far is not credited at the date of transfer. As said previously, on a transfer it is normal for the balance including interest earned to date to be transferred.

I am assuming that it is credited to the Fixed Rate ISA on 31st March which benefits the Nationwide as this, as yet unpaid, interest cannot itself earn interest at the fixed rate from date of transfer until 31st March.

The Yorkshire Building Society has done the same when transferring ISAs internally calling it a product migration.

I just need to check after 31st March that it has been added correctly.

I am a bit confused now. I have got a Nationwide Isa bond with 60 days notice and I want to transfer it to a fixed one. CS at Nationwide told me I can do the transfer without having to give notice. So is it better to wait until 31st March to go with the transfer? Thanks

Milarky

loulou41 wrote: »

I am a bit confused now. I have got a Nationwide Isa bond with 60 days notice and I want to transfer it to a fixed one. CS at Nationwide told me I can do the transfer without having to give notice. So is it better to wait until 31st March to go with the transfer? Thanks

You could go for 31st March (by giving notice now for them to be ready) But you can also transfer without notice OR penalty IME - and giving '31st March' means you aren't actually giving 60 days notice anyway.

I would suggest you get Nationwide CS to confirm that, on transfers, the penalty/notice is waived by them - as its not printed up anywhere but now widely accepted as accurate information. 'Electra House' are the people you have to speak to.

martinman3

loulou41 wrote: »

I am a bit confused now. I have got a Nationwide Isa bond with 60 days notice and I want to transfer it to a fixed one. CS at Nationwide told me I can do the transfer without having to give notice. So is it better to wait until 31st March to go with the transfer? Thanks

The information Milarky has given is absolutely correct concerning the transfer.

My post is referring to the interest gained so far for this tax year not being paid until 31st March and not added to the Fixed ISA bond until then (I assume).

david78

You can just transfer now. No need to give notice and no penalty. Nationwide won't care if you are just transferring to another ISA with them.

Assuming you transfer the full balance of the existing account, they will credit your existing account with interest up to the day of your new application, then move the money to a new fixed rate account (new account number) and close the old account. There will be no loss of interest with funds in limbo. Pretty painless but you need to go into a branch and do it.

If you transfer only part of the account, leaving as little as £1 in it, you won't get the interest until 31 March, and you will then have two ISA accounts with them. You probably don't want to do this!

Any interested credited at the point of transfer will earn interest at the fixed rate.

No point in waiting 60 days as the rate on the fixed rate account may drop in that time.

martinman3

david78 wrote: »

Assuming you transfer the full balance of the existing account, they will credit your existing account with interest up to the day of your new application, then move the money to a new fixed rate account (new account number) and close the old account.
Sorry to disagree, but you are wrong. This is not what they do.

Any interested credited at the point of transfer will earn interest at the fixed rate.
On the Nationwide fixed rate ISA bond which I know of personally where the entire balance was transferred there has been no credit of interest after transfer. Whether the interest which is credited on 31st March has extra interest earned at the fixed rate added to it on that date I do not know. I need to wait until then to find out.

By the way I have just transferred yet another variable ISA to a fixed ISA internally within a different organisation and they too have treated it as a product change/migration with no payment of interest at transfer date.

david78

You can disagree if you want, of course.

But this is what they have always done for me each time I have transferred between their different cash ISA accounts (and former Mini Cash ISA accounts and TOISA accounts).

I stress you need to tick the box to transfer the full account, and not just specify an amount you want to transfer equal to what you have in the account (they are different things).

martinman3

I looked back at your previous post about ISA transfers at Nationwide
http://forums.moneysavingexpert.com/showpost.html?p=11549609&postcount=10
and in that instance you transferred 3 Nationwide ISAs into a single Fixed Rate ISA. I would have thought that would require a special procedure as all closure balances including interest would need to be added together and transferred in one lump sum as a fixed rate ISA cannot be added to once opened. It is also not surprising that a new account no. was created in this instance.

But when a single Members ISA Bond is transferred to a Fixed Rate ISA the account no. stays the same and there is no interest added at transfer time.