I'm a bit thick but

missreid9283

I've been putting money into an ISA for years but am not getting a good rate on it now. As I don't touch the money I must admit I haven't worried too much about it but sorry to be thick but does the interest you get just get added on at the end of the financial year? I am thinking about moving my money to another bank with a better rate-if I did this now would I get interest based on this entire amount ie if I put £10000 into an ISA at 3% would I end up with £10300 in April?

Lokolo

No. It's calculated pro rata. So if you have had the money for 3 months, you'll get 3 months interest, not a whole years. But you will get some interest.

psychic_teabag

Some accounts add the money monthly, some annually on the anniversary of opening, others annually on a fixed day of the year. But as Lokolo says, you earn the money pro-rata for the time it's actually with the provider. Any interest owed to you by the previous provider will be added when you close or transfer the account, and then you'll earn interest from the new provider for the time the money is with them.

Just to check - you know you must transfer the ISA by asking the new provider to pull it from the old provider, rather than just closing the old account and taking a cheque with you to the new provider.

http://www.moneysavingexpert.com/savings/cash-isa-transfers

FLAPJACK

I think you will find that anyone with a cash ISA at the moment is eyeing better rates in other types of accounts, (unless they have a fixed rate one from a few years ago). Remember that these accounts are taxed so unless you tie the money up for 5 years or so the net rate will probably be similar to your untaxed ISA.
Really it would be better just to ride out this period of low interest (must be coming to an end soon!) and leave the money in the ISA otherwise if you take it all out you won't be able to transfer the same amount back into the ISA... only £5340 (for the upcoming financial year). Even if by then the rate is higher than it is now, because you will have a reduced capital sum it won't be earning you as much as the full sum of 10k that you have sitting in the ISA at the moment.

Loughton_Monkey

You have to be very mercenary with your ISA's. Each year, you buy the best rate, and you transfer the previous pots to the highest you can (the best ISA that accepts 'transfers in').

All extremely simple. But you just need to do a bit of work at the appropriate time.

Jake'sGran

FLAPJACK wrote: »

Really it would be better just to ride out this period of low interest (must be coming to an end soon!) and leave the money in the ISA otherwise if you take it all out you won't be able to transfer the same amount back into the ISA... only £5340 (for the upcoming financial year). Even if by then the rate is higher than it is now, because you will have a reduced capital sum it won't be earning you as much as the full sum of 10k that you have sitting in the ISA at the moment.

This is not correct. The amount in the existing ISA can be transferred to a better paying one BUT it has to be done by the provider of the new ISA.

MISSREAD should not withdraw it The West Bromwich BS are offering an ISA paying 2.88% which includes a one year bonus and which allows 3 withdrawals a year. If she chooses this she needs to contact The West Bromwich BS and they will arrange it for her.

FLAPJACK

I had missread the OP, I though they were talking about the consequences of taking money out of the ISA and depositing it in a better paying non- ISA account.

I take it however that I am correct in saying if you take any money from an ISA you cannot pay it back in, so had they taken out the full £10k then they would have only been able to replenish next years ISA upto the new maximum of £5340.

Sorry for any confusion caused.