Possibly silly question about transferring isa's around....

rhino2k

Hi All, i currently have 2 natwest e-isa's

One from 2007/2008 tax year and one from 2008/2009

I Also have the full £5100 to invest in a new isa.

Now looking online it states the gross rate for my current isa's as....

e-isa 10k plus 2.97%

e-isa before 14th may 2009 10k plus 3.21%

so my question is can i transfer my current isa and the new £5100 limit one to my original isa and get the 3.21% rate?

Hope this is not too daft a question, as from my eyes it seems a very good rate compared to the others around:beer:

thanks

Neil

rhino2k

Hmm it would appear i have read the previous interest rates, and the best available is 2.97 over 10k.

My 2008 isa has £3850
My 2009 isa has £3713

So my question really now is do i simply put all the isa's together? it appears my 2009 isa gets a slightly better rate now, but up until recently it was the other way round, and not just because of the <£150 extra, now the newer one makes more interest!

Im going to assume my best approach is to pool all the money into my 2009 isa?

Thanks again:easter_os

masonic

rhino2k wrote: »

Im going to assume my best approach is to pool all the money into my 2009 isa?

You will typically lose a few days interest when transferring an ISA (sometimes as long as a week). It takes time earning interest at the better rate to compensate that. I would not normally transfer an ISA unless the difference in rates was around 0.5% or better, especially if the new ISA was variable rate and could be dropped after a short time.

rhino2k

Thanks for the reply, has given me a few things to think about.

I assumed transferring from one isa to another would be instant if it was in the same bank and done online?

Anyhow, the one week loss would only amount to a £2-3 so i would make it back quite wuickly especially considering i would be making an extra .29%

Just not sure what to do really, and see little point asking in the branch as they are bound to just suggest whatever is easier/best for them:rotfl:

thanks

masonic

rhino2k wrote: »

Thanks for the reply, has given me a few things to think about.

I assumed transferring from one isa to another would be instant if it was in the same bank and done online?

Some banks will simply redesignate or amalgamate ISAs, and the process is indeed seemless. However, I know from bitter experience that Natwest does not work quite that way. Electronic transfers (which I believe is the system Natwest is now signed up to) are sent by BACS from a holding account, so you might expect to lose 3-5 days interest. You might benefit from a faster internal transfer process, but I wouldn't be surprised if you didn't. Sometimes strange clearing rules are also applied to ISA transfers which can add a few days on to the time that you are without interest. I know I had to raise a 'concern' with Natwest over the interest I earned in the first month because I calculated I was not earning interest from the date the money was credited to my account.

Anyhow, the one week loss would only amount to a £2-3 so i would make it back quite wuickly especially considering i would be making an extra .29%

Based on the best rate of 2.97% and difference of 0.29% it will take between 2-3 months to make back the loss, assuming the worst case scenario of a week. But if the rate on the new account dropped in that time, you could be worse off than if you'd done nothing.

Just not sure what to do really, and see little point asking in the branch as they are bound to just suggest whatever is easier/best for them:rotfl:

Unless things have changed in the past year, the branches don't have much to do with ISAs at all - it's all dealt with centrally in a tax free accounts department. My experience transferring from one Natwest ISA to another in branch was that nothing happened and I found myself chasing it up in vain a month later. That was the third issue I'd had with Natwest that year and I took it as a sign to move on .

rhino2k

Thankyou for the info, looks like i will leave it as is for now and see what new deals are on offer for my new allowance:beer:

rhino2k

Just thinking now, as the rates are only good for over 10k, alough still a bit less than elsewhere, im thinking i really will have to put all the money in the 2008/09 isa, as then i will get 2.97% on all my money rather than 2% on the new £5100 (which i will put straight in) and 2.75 on the others?

I know i will lose a small amount of interest on the isa i move but surely i will gain it back very quickly at the higher rate? Especially since the £5100 will be making almost 1% more too.

Really need to sort this out now so i can get things set up, so just wanting to know if this is the way to go given the poor rate offered otherwise, as the previous advise was sound until this 2% rate?

I dont suppose anyone knows if natwest will be making better offers after the easter break? as in the past their rates have been very good:eek:

thanks for any help:beer:

rhino2k

oh dear, i have just realised they are not fixed rates, not good:eek:

masonic

rhino2k wrote: »

Just thinking now, as the rates are only good for over 10k, alough still a bit less than elsewhere, im thinking i really will have to put all the money in the 2008/09 isa, as then i will get 2.97% on all my money rather than 2% on the new £5100 (which i will put straight in) and 2.75 on the others?

I know i will lose a small amount of interest on the isa i move but surely i will gain it back very quickly at the higher rate? Especially since the £5100 will be making almost 1% more too.

Really need to sort this out now so i can get things set up, so just wanting to know if this is the way to go given the poor rate offered otherwise, as the previous advise was sound until this 2% rate?

I dont suppose anyone knows if natwest will be making better offers after the easter break? as in the past their rates have been very good:eek:

thanks for any help:beer:

I don't really understand your post. You have two ISAs, both currently earning 2.72% gross. If you pay £5100 into your most recent ISA, it will also earn 2.72% gross. Only if you open a new account will you earn the lower 1.98% gross rate.

As you point out just above, the rates on your current ISAs are not fixed, and Natwest has a history of gradually dropping them to eventually bring them in line with its current rate (now 2%), so it's fairly likely you will have good reason to move the money soon.

If I were you, I'd be looking at opening a new ISA somewhere else for your new £5100, and then transferring your existing ISAs into it or another account later in the year. Avoid transfers at this time of year, because they tend to be considerably slower as banks get swamped with ISA paperwork.

rhino2k

Ah i see, my way of thinking was that if i put my new allowance into the 08/09 isa, then add the money from the 07/08 one it will go past the 10k barier and net me an extra .25% interest on all the money.

Would there be no point doing this then? im thinking the slight loss of interest from the 07/08 isa will be very quickly gained back from the extra i get from another .25% on all the money? i was also thinking it would be easier to move around when needed if it was in one lump sum?

I will be looking elsewhere but the ones that offer transfers in are no better rate than i can curently get:beer:

Thanks for the advise

Neil

masonic wrote: »

I don't really understand your post. You have two ISAs, both currently earning 2.72% gross. If you pay £5100 into your most recent ISA, it will also earn 2.72% gross. Only if you open a new account will you earn the lower 1.98% gross rate.

As you point out just above, the rates on your current ISAs are not fixed, and Natwest has a history of gradually dropping them to eventually bring them in line with its current rate (now 2%), so it's fairly likely you will have good reason to move the money soon.

If I were you, I'd be looking at opening a new ISA somewhere else for your new £5100, and then transferring your existing ISAs into it or another account later in the year. Avoid transfers at this time of year, because they tend to be considerably slower as banks get swamped with ISA paperwork.

masonic

rhino2k wrote: »

Ah i see, my way of thinking was that if i put my new allowance into the 08/09 isa, then add the money from the 07/08 one it will go past the 10k barier and net me an extra .25% interest on all the money.

Would there be no point doing this then? im thinking the slight loss of interest from the 07/08 isa will be very quickly gained back from the extra i get from another .25% on all the money?

You could do that, but depending on how efficiently the transfer process is carried out by Natwest, you could be waiting as long as 3 months to break even. As I said above, this is the worst time of year to be transferring because of how busy ISA managers are. Add to this the very real possibility of Natwest's rates going down in the short term and there's a risk you might never reach the point where you start to benefit from putting the two ISAs together. However, if you don't believe Natwest will drop your current rate down towards the 2% they currently pay, you might still want to do this.

i was also thinking it would be easier to move around when needed if it was in one lump sum?

It is simply a case of filling out two transfer forms instead of one when you decide to move the money out of Natwest.

I will be looking elsewhere but the ones that offer transfers in are no better rate than i can curently get:beer:

True, although there are accounts for new money paying 3.2% with a 12 month rate guarantee. If you took that up and left your Natwest money where it was, you'd only be £8 worse off over the year, but half of your money would be protected from interest rate cuts. The Natwest money could be moved to a different ISA when those rates start to fall towards the latest 2% rate.