Better to Cash in our ISAs?

CountDrakma

Me and my wife together have almost £23000 worth of ISAs which were in a decent fixed rate with the Halifax but which have now reverted to a pathetic 0.5% variable. We prefer fixed rates and not to tie money up for more than one year at a time. The best fixed deals out there don't accept transfers - eg Coventry @ 3.25%. Would it now be better to simply cash in the Halifax ISAs and use the funds as fresh money to open new ISAs upto our joint max of £10200, and just put the rest - £12800 - into decent paying bonds/other savings rather than let them fester in a poor Halifax ISA account? (We don't have any real fresh money to invest this year and we're not risk takers).
Ta
Count Drakma

adaze

NO! Don't cash in your ISA's otherwise you'll be paying tax on the 23,000. I;m sure there are reasonable ISA's out there that accept transfers.....

Mickygg

Adaze has said exactly what I was going to. It may seem ISA's are pathetic at the moment - it's true they are, but it was only just over a couple of years ago you could get 6% on them.

If you are a tax payer I would strongly recommend keeping the ISA's - there are ones you can transfer to for about 3% see below: -

https://forums.moneysavingexpert.com/discussion/401374

To be honest bonds are not paying much higher for 1 year bonds, infact they are just as terrible!

Keep the ISA's.

Daz2009

Nationwide do a transfer in ISA at 2.75 % with no penalties

CLAPTON

if you can't afford to put 10,200 of 'new' money into ISAs this year then cashing in 10,200 of your existing ISAs and re-investing in the coventry makes sense.. the rest can be transferred to the nationwide at 2.75%

juicyjude

Just one note though. Yes not many will let you transfer, but the Nationwide have been terrible at transferring my funds. Application completed 7th April and still no completed transfer yet!!!! Just a warning.

Honkycat

Transfer to the higher rate Halifax ISA Reward. A phone call does it... I did mine earlier in the week.

Jake'sGran

Daz2009 wrote: »

Nationwide do a transfer in ISA at 2.75 % with no penalties

Nationwide insist that savers in some of their good accounts also open a Flex Account
therefore if you are interested in the one above check this first. I like fixed rate accounts but the rates for one year are poor. I just managed to get two ISAs for my husband with the Leeds BS paying 4.6% (one for last year and one for this. They are fixed for five years but you can take out 25% with no penalty in a year. If you are interested they still do this account but have reduced the rate a bit.

CountDrakma

Ta folks, much appreciated. May I add some comments:

adaze & mickgg - There's no chance that we would cash in the £23000 and just leave it in taxable accounts. (However bear in mind that even someone was daft enough to do that then they would still only pay tax on the interest which would accrueon the £23000 and not on the full £23000 itself, if you know what I mean.

CLAPTON: You seem to concur with our initial thinking.

This is my thinking about "cashing in" part of our accumulated ISA value:

Between us we have £23000 worth of ISAs. We don't, and will not, have any new money spare for this year's allowance so we each "cash in" £5100 from last year's ISAs and use it as the "fresh money" needeed to enable us to invest in 2 top paying fixed ISAs for 2010/2011(eg Coventry @ 3.25%). The remainder of the £23000 would simply be transferred into other ISAs. The two cheques for £5100 could be temporarily "parked" for a couple of days in our joint current account pending opening of the top ISAs so no tax is paid, (although granted, no interest would be earned for that very short term either). In fact, why "park" the cheques at all: just use them as issued to us to open the Coventry ISAs? Have I got things right, or is my reasoning, or understanding of ISA regulations, wrong? Moreover, I've worked out that going through all this palaver would net us £51 between us, so would it even be worth it !!!???

Ta
CountDrakma