ISA Interest question

pimento

I have just opened my very first cash ISA with First Direct. I paid in £3600.00. The interest rate is advertsied as 3% guranteed until November 2010 when it will fall to a paltry 0.20%.

As November is halfway through a financial year, can you just move your money to a different ISA/bank paying more interest? Or are you stuck with the 0.20% until April 2011?

lisyloo

You can move your ISA whenever you want, subject to any account condition e.g. 30 days notice.
ISA transfers can be slow.

pimento

Thanks Lisyloo. Should I perhaps start looking for a better rate a couple of months before next November?

What if First Direct are advertising a better rate by then? Can I move it within the same bank?

lisyloo

There is already a better rate available (manchester BS 3.26%).
It might not be worth moving for 0.26% but I'd say you should keep your ear to the ground all the time e.g. get Martins weekly email, but yes, I'd say one month before you definitely want to get out of the paltry rate.

I don't know if First Direct would accept transfers from existing customers, you'd need to ask them. Normally they do good rates to get more money in, but it all depends on their terms and conditions so can't give a general answer I'm afraid.

KingL

Should I perhaps start looking for a better rate a couple of months before next November?

It's a good idea to keep an eye on rates all the time. If someone comes up with a 5% rate in Sept 2009, why would you want to stay with IF at 3.0% until Oct/Nov 2010? You can leave anytime including during the guarantee period.

Keep a regular watch on this and this

What if First Direct are advertising a better rate by then? Can I move it within the same bank?

Not all new ISAs accept transfers-in from other ISAs - it's up to the individual provider whether they offer this feature. A future ISA from FD might or might not accept transfers-in from another FD ISA, it depends on what they choose to offer at the time.

Generally it's not a good to feel wedded to a particular ISA provider. There are a whole universe of offerings out there. Be a rate-tart. Make the market work for you !

pimento

The reason I went with First Direct was that I bank with them, and my husband (who also banks with them) is a complete financial and computer illiterate so I have to do it all for him. It took forever to get him to call FD in the beginning to set up security on his account so the thought of him having to prove who he is to a different financial institution gives me The Fear....

Can I assume that once vetted by FD, if we do transfer out to another bank we won't have to prove who we are all over again?

david78

No don't assume that!!!

pimento

Gah! :mad:

lisyloo

an I assume that once vetted by FD, if we do transfer out to another bank we won't have to prove who we are all over again?

No, the new bank has obligations to vet you.
However I noticed when loking at Manchester that they say they might be able to do this electronically.
I don't know what they check (electoral role? credit records?) but it sounds like in some cases it can be done electronically rather than sending off passports etc.