ISA help

chopperward

I already have a 1 year fixed rate ISA with Nationwide that matures on 5th April.

I popped into a branch today to try and snap up the E-ISA at 2.9% for 2011/12.

Basically all I wanted to do was make the arrangement so the current ISA transfers to the new one when the current one matures.

I did also want to set up the £5,100 allowance with savings from E Saving Plus and 1 year E-bond. I wasn’t able to do this though until they mature.

In the end the lady sent me away to think about it. My main reason for setting it up now was that I can’t see the 2.9% going any higher, and it may go down.

Am I right in thinking that if I set it up now my current ISA wouldn’t be penalised and I would get all the interest accrued for the 12 month period?

I don’t know why they lady tried to put me off sorting it out now. She did say interest rates could go up but who knows!

lisyloo

Am I right in thinking that if I set it up now my current ISA wouldn’t be penalised and I would get all the interest accrued for the 12 month period?

I haven't seent the Nationwide form, but on most forms there are two options like this

a) transfer immediately and pay any penalties please
b) do not transfer until penalties expire

Am I right in thinking that if I set it up now my current ISA wouldn’t be penalised

If you fill out the form correctly and they don't c**k it up then you should not be penalised.

Are you sure they allow transfers within Nationwide?

chopperward

Yes, I was concerned the lady was going to mess up. That's why I decided to leave it in the end.

She didn't get any forms out! Just said she could open it and started opening on computer. She said all the money would have to go into flexaccount first then I would have to transfer it. But surely she just meant the E-bond and not the current ISA.

Transfer? Well all I want to do is set up my ISA for April. So my current ISA runs say to the 5th April and then this will go into the 2011/12 ISA, say from the 6th.

soulsaver

Well the 2.9 2011/12 isn't likely to disappear at least until we get to 2011/12 which is April 6th.
It certainly wouldn't be wise to put funds in your ISA into the flexaccount as they would lose their ISA wrapper.

Jake'sGran

I think I would wait a while as interest rates are expected to rise this year. You have nothing to lose if you just leave the existing ISA as it is or have it transferred to a better paying one with another provider when it matures. Remember that the new provider has to make the transfer, not you.

Aldermore BS have one paying 4.1% fixed for three years and West Bromwich have one paying 2.88% with easy access. Both allow transfers-in. Both require a minimum of £1000.

If you fancy either of these you could then have a new ISA for the new tax year.

lisyloo

She said all the money would have to go into flexaccount first

NO, NO, NO
You do not want to move it outside an ISA.
You will lose your tax free allowances.
It has to go from ISA to ISA.
The whole point is to maintain the ISA status and KEEP your previous tax free allowance for past years intact.
Make sure the person you are talking to understands this. If not ask to speak to someone superior.

So my current ISA runs say to the 5th April and then this will go into the 2011/12 ISA, say from the 6th.

If I were you I'd go into the branch on 6th and ask them to do it and not before.
That way they won't mess up your old isa.
You won't loose interest beacuse of the Natiowide promise.

4 When you transfer a Cash ISA to us you will start earning interest as soon as we receive your application.2

http://www.nationwide.co.uk/savings/savingspromises/default.htm

This xfer is using your old allowance so your new allowance (£5340 not £5100) is still available but ONLY if you transfer from ISA to ISA and don't withdraw.