ISA question

stewdaviesuk

I and my wife opened Nat West e-Isa's I think 4 years ago, maybe more. Some years we pay money in, not always the full amount, depends what we can afford. I keep an eye on the current rates on offer, which I know Nat West arent great.

I have recently noticed that the rates quoted are not the rates I am getting. Nat west says 2% on under £30,000, but I am getting just 0.5% as far as I can tell. I understand that maybe when i put my first cash in it may have been a deal such as x% below base rate but the current deal is not, nor was it in April 2010.

It seems perhaps the poorest rate is applied to my ISA, no matter which year it was opened in. I would have though if I had previous years ISA then that would make sense but if I pay in to a 2010 e-isa I should be getting 2010 rates not some other deal.

Am I misunderstanding how it works?

Stew

masonic

It's the date the account was opened, not the date you pay in money, that determines the rate. Banks don't want to pay as much interest to existing customers as they offer up new customers to lure them in.

It's pretty common for banks to launch new editions of the same savings accounts and then discontinue and quietly drop the rate paid to existing accountholders in the background. It sounds like that is what's happened to you. To get the new headline rate, you need to apply for a new account.

stewdaviesuk

Wow!! So I open a new online ISA every year with Nat West, ( all I have to do is pay in after April 5th and its open automatically) but because I had one from previous years, which was a poorer deal that is applied to every new ISA I open at Nat West and no one at the bank told me.

I have no idea how to open a new one, I went to the bank as I had not used my ISA for a year and it had to be reactivated and there was no mention that I would not get the current rate as I had opened one years ago, this seems very poor.

Thanks for the heads up.

masonic

stewdaviesuk wrote: »

Wow!! So I open a new online ISA every year with Nat West, ( all I have to do is pay in after April 5th and its open automatically) but because I had one from previous years, which was a poorer deal that is applied to every new ISA I open at Nat West and no one at the bank told me.

Technically it can be called a 'new ISA' when you subscribe new funds in a new tax year, but for all intents and purposes it is the same account.

I have no idea how to open a new one, I went to the bank as I had not used my ISA for a year and it had to be reactivated and there was no mention that I would not get the current rate as I had opened one years ago, this seems very poor.

With the eISA, you apply through their website. If the person you spoke with at the bank was knowledgeable enough and had your best interests in mind, you would have been advised to open an new account online and then transfer in the existing ISA to get the best rate on all of your money.

stewdaviesuk

Many thanks for that Masonic. On the website for the current deal it says if you have had an ISA in the past but not used not for a year then you need to reactivate not apply for a new one. Clearly then this is wrong if you are expecting the current rate.

I will be in touch with the bank to see how this money can be transferred to the better paying ISA. I just wanted some cash with them as a backup fund and felt the ISA was a good a place as any as I can tranfer online if i needed money in an emergency. It may have to be after April now but no big deal for me if thats the case.

Many thanks for the heads up.

Stew

stewdaviesuk

Just checked and I opened a online Cash ISA not an e-ISA. The cash ISA pays only 0.5% so I need an e-ISA and have the old Cash Isa transferred. Hopefully the bank will do this for me if I ask.

masonic

stewdaviesuk wrote: »

Just checked and I opened a online Cash ISA not an e-ISA. The cash ISA pays only 0.5% so I need an e-ISA and have the old Cash Isa transferred. Hopefully the bank will do this for me if I ask.

You can't open the e-ISA in branch, so you'll need to open that online first of all. You can then either visit the branch to arrange the transfer, or print and post a transfer form to them.

Mikeyorks

stewdaviesuk wrote: »

Just checked and I opened a online Cash ISA not an e-ISA. The cash ISA pays only 0.5% so I need an e-ISA and have the old Cash Isa transferred. .

You sound to be missing out on copious amounts of interest. Consider transferring all your old year funds to a fixed rate for no more than a year? That way you can at least turn your back on the rates for a while.

Once interest rates pick up to around 5% ...... then consider fixing for the maximum period (4 or 5 years depending on provider). That way you can turn your back for longer.