Fixed-Rate Cash ISAs

baldbloke_2

I can't seem to get my head around the fixed-rate, fixed term cash ISA idea.

I don't understand what happens to the £3000 at the end of the tax year if the ISA has technically ended. Can one invest anew the next year and somehow transfer the ISA that finished on 5th April? - presumably if the ISA has ended then there is no ISA to transfer. I must be misunderstanding something.
I'm thinking of say the Halifax fixed-rate fixed-term 5% ISA for next year - what happens at the end of that time?

Sillychuckie

The bank will write to you giving you options... They are usually along the lines of:

- Ignore this letter. We will automtaically change your fixed rate 5% ISA to one of our variable ISA packages, probably worth around 4-4.5%.
- If you wish to withdraw the balance, provide us with an account to transfer it to.

Note. DO NOT WITHDRAW IT, or you'll lose the ISA and tax free status. Yuor best be is to just let them do whatever they do with it (option 1) until you find a better, new ISA to transfer it to (transfer being the key-word).
You then instigate this transfer from the NEW ISA provider, who will take the 3k from your halifax account (which halifax will then close), and you'll be able to add a further 3k as the next tax year has started.
The interest on that 3k may have been added to the 3k balance, or paid into another bank account of your choosing. It depends on the specifics of the ISA you are with.

Howard.