Cash ISA Transfers - Why Such a Bad Thing

Cardinal-Red

Assuming that the point of a bank offering an ISA is to get access to your cash in order to invest it in such a was as to make a return for the bank greater than the interest rate it pays you, why do so many Cash ISAs forbid you transferring previous years ISAs in?

I'd have thought getting hands on maximum cash was an objective in itself, and also somebody transferring in, say, 4 years of fully subscribed cash ISAs would represent the kind of long term, "leave the balance alone" saver that banks would lap up?

Am I missing something?

Mr_K

They are only prepared to offer good rates on a limited amount of money. You could potentially have up to 50k in a cash isa by now, and they're not prepared to pay out good interest on that amount. Accounts where you can transfer in are less and less and you won't see them in the best buy tables.

I know what you mean though, you'd think they want a large amount deposited, but they ain't prepared to pay for it ! Things are cr*p at the moment for ISA savers, banks are making a bigger margin on them than ever before.

Gordon_the_Moron

They offer big rates to suck customers in then they plummet usually after around a year (the Santander one will when the fixed 3% above the base rate ends, no two ways about it is more than likely going to drop to <1%. They hope many will not remove the money at this time, especially as the new best deal people may be grabbing will not accept a transfer from the previous one) they also want new customers to try and flog current accounts, mortgages, credit cards, loans etc to.

My ISA from the tax year just ending with Saffron Building Society has just matured and paid 7% for the year, they are not making big profits on these deals whilst the offers are running but they hope you will leave the money there and want the new customers therefore they don't want the maximum amount of money possible in them, perversely they want as little as possible in them.