C&G 2.7% ISA - Transfers in catch

Thriftynifty_2

Although C&G's current best buy ISA (at 2.7% including initial bonus) allows transfers in, they don't want my money - there is a subtle catch in the Ts and Cs.

In summary:

You can't open the ISA by transferring in 'old money', unless you also transfer in from an ISA to which you have subscribed in the current tax year (2010-11).

This condition is not made clear in the overview/key facts, and it is only on closer inspection and reviewing the very small print in the back of the Ts&Cs that it becomes apparent. It's more explicit in the Ts&Cs for Birmingham & Midshire's similar offering, and this seems to be quite a common catch for ISA transfers in having now done more research with other providers.

What I wanted to do:

I have an ISA pot with First Direct of approx £7,500. I consolidated a couple of ISAs into this account about 18 months ago at 2.6% AER, which was a good rate at the time. The fixed/bonus rate comes to an end 31 July and will reduce to 0.2% (I kid you not, nought point two per cent!), hence I'm looking for another home for my money.

This year, right at the start of the 2010-11 tax year, I stuck my whole cash ISA allowance (£5,100) with the Coventry BS at a 1 year fixed rate of 3.00% (transfers in were not available), another good rate at the time

Now, C&G won't allow me to open my account by transferring in the historical £7,500 pot from First Direct, but they will allow me to transfer in if I transfer in both the First Direct pot and this year's ISA that I've taken with Coventry BS.

So, if I am to take up this product it means further consolidation of my ISA pot is required. That's not necessarily a bad thing, but I'd prefer to spread it around a bit.

Update (11/07/2010):

I've applied online to transfer in my 'old money' to a 1 year fixed rate ISA at 2.85% (AER) with Aldermore Bank. Quick and simple.

mummydelicious

Thanks for your post, I've just received my C&G transfer forms and spotted this in the small print! Is this common practice with cash ISA transfers then?

You've obviously found another provider now and locked your money in for a year. During your search, did you find any cash ISAs with instant access that accept transfers and don't insist you have your 2010/11 cash ISA with them?

ericpode

You can't open the ISA by transferring in 'old money', unless you also transfer in from an ISA to which you have subscribed in the current tax year (2010-11)

I haven't subscribed to an ISA in the current year, but I'm looking for somewhere to move my historical M&S ISA which has come to the end of its special offer period.

Are you able to open a C&G or Birmingham MS ISA at 2.7%, transferring-in a historical ISA AND also pay-in an amount for the current tax year (rather than transfer-in an EXISTING current year ISA) ?

Also, do you have to have FULLY subscribed to an ISA in the current year to satisfy the "catch", or can you just have subscribed say £1000 in the current year?

bluesntwos

I think this is very common practice as I was looking around at Isas about a month ago. Most of the best rates now won't accept 'transfer-ins' and those that do want you to subscribe your current tax year money to allow you to transfer in your 'old' isa money. This usually means having to accept a lower rate unless you just want to open a new one each year at the best rate but then you miss out on subsequent years when the interest rate drops to a measly amount. I don't know of and haven't seen any isa providers which will allow you to transfer in 'old' money without bringing in some new money at the same time.

ManAtHome

Nationwide e-ISA lets you just transfer in - only restriction is if the 'old oney' includes 2010/11 subscriptions you can't do part-transfers (think this is a HMRC/ISA rule).

Kent Reliance and M&S Money have also allowed this in the last couple of years - may be worth a look.

Thriftynifty_2

Apologies, I've been offline for the last couple of weeks.

mummydelicious,
I hope you've found a home for your savings now. I'm afraid I can't give you any leads on instant access ISAs that allow transfers in, as I wasn't researching that particular market. I'm happy to be locked in for a year with Aldermore at 2.85%.

However, while I was on the Aldermore Bank site I did spot that they also have a 30 day access ISA at 2.65%, which seems very reasonable given rates are desperately low across the market. In effect, you can use this as an instant access account if you are prepared to lose 30 days interest on the amount you withdraw.

ericpode,
The short answer is that if you haven't currently subscribed to a cash ISA elsewhere for the current tax year (which I believe is your position), then both C&G and Birmingham Midshires will welcome you with open arms.:j

The longer answer...
Both C&G and Birmingham Midshires will allow you to transfer in 'old money' (ISA subscriptions pre 2010-11 tax year) provided you subscribe to their ISA for the current tax year. I didn't do this, because I had already taken an ISA for 2010-11 with Coventry BS and I did not want to move it to either C&G or BM. The fact that I've put all my 2010-11 ISA allowance with the Coventry is not relevant. What is relevant is that once you have subscribed (deposited 'new money') to a cash ISA with a provider in the current tax year, then you cannot subscribe to a cash ISA with another provider in the same tax year - even if you have not yet deposited the full ISA allowance of £5,100.

So, the catch is that if you've already subscribed any amount from £1 to £5,100 for the tax year 2010-11 with another ISA provider, then C&G and Birmingham Midshires will want that ISA to be transferred to them too, before they will accept your 'old money' from previous tax years.

I now need to have a lie down. And I only logged in to look for some cheap house insurance! That is: cheap insurance for my house, not insurance for a cheap house.

ericpode

Thanks thriftynifty.

Just to clarify ... I have an old ISA at M&S which I'd like to transfer, and I have NOT subscribed in the current year, AND I do not really want to pay-in a substantial amount for this year (yet).

Can I get a transfer to the C&G or BS ISA while subscribing ONLY SAY 100 pounds for this tax year?

In other words, just subscribe a nominal amount for THIS tax year just to get past their requirement?

Thriftynifty_2

Hi ericpode

The good news is that C&G will let you take up an ISA with an initial 'new money' deposit of at least £1 and then allow you to transfer existing 'old money' ISAs from other providers. Similarly BM Savings will allow you to do this, but the initial 'new money' deposit must be at least £500.

You can then top up throughout the tax year - ie. until 5 April 2011 or until you reach your limit of £5,100 (assuming you do not subsequently withdraw any 2010-11 deposits).

In each case you will need to request and complete a Cash ISA Transfer Authority Form as part of the opening process in order to transfer your old ISAs (if you still want to do this).

mrsplinter

Thriftynifty wrote: »

The longer answer...
Both C&G and Birmingham Midshires will allow you to transfer in 'old money' (ISA subscriptions pre 2010-11 tax year) provided you subscribe to their ISA for the current tax year. I didn't do this, because I had already taken an ISA for 2010-11 with Coventry BS and I did not want to move it to either C&G or BM. The fact that I've put all my 2010-11 ISA allowance with the Coventry is not relevant. What is relevant is that once you have subscribed (deposited 'new money') to a cash ISA with a provider in the current tax year, then you cannot subscribe to a cash ISA with another provider in the same tax year - even if you have not yet deposited the full ISA allowance of £5,100.

So, the catch is that if you've already subscribed any amount from £1 to £5,100 for the tax year 2010-11 with another ISA provider, then C&G and Birmingham Midshires will want that ISA to be transferred to them too, before they will accept your 'old money' from previous tax years.

Actually with Birmingham Midshires you can just transfer in old cash ISA money you don't need to subscribe with them for this year's ISA or transfer this year's ISA.

I transferred my old ISA to them last month but I'm still filling up my current year's ISA at A&L. They send you a pile of forms which ask you to make a deposit by cheque, when I rang up and asked they said I didn't need to do this if I was transferring old money in.

Thriftynifty_2

You are correct.

I phoned Birmingham Midshires today and was told by their very helpful and polite call centre staff that the restriction applied previously, but is no longer. The account I was enquiring about was the ISA Extra (Annual Interest) at 2.70%. However, the Aldermore account is a better rate (at 2.85%) and I can manage it online rather than by post, so I'm happy. But it is good to know that some enlightened providers such as Birmingham Midshires are lifting these awful conditions. Savers suffer enough from lack of decent rates and the outrageous time to transfer funds from one provider to another - in my most recent experience 20 days from First Direct to Aldermore - so more options are appreciated.