WHEN to transfer ISA's - Confused.

soulsaver

catslovelycats wrote: »

I'll try, but not sure if this is any clearer:
I have a cash ISA with less than £5100 in it.
I opened it in July and the rate lasts a year.
As its duration runs across the tax year, does it mean I can keep putting money in (up to the maximum allowance) after April?
eg. say the balanace is £1000 and I put another £2000 in this side of April. Can I put in, say, £2100 between April and July - ie within the 12 month account period? Or does it have to be put in within the tax year?

If you've not made any withdrawals you could top it up to £5100 before close of business April 5th, if your provider (Bank or Building Soc) allows additions.
You CANNOT deposit the top up in an ISA elsewhere, unless you transfer the whole current year's ISA to the new provider first.

From 6th April you get a new (cash) ISA allowance £5340 for 2010/11 tax year to deposit with any provider you like. It's unlikely you can, or would want to add it to the current arrangement as better offers are likely to crop up for the new tax year. But if that's what you want to do, ask your bank to clarify whether you can.

cemeterybird

Thanks for all your replies to my orginal question, also to catslovelycats, cslogg and gregmac666 for the additional queries.

I think things are a little clearer now - can I run what I think by you all to check if I've got things right please?

Although it is not absolutely necessary (except with a couple of exceptions), it is probably best to wait until the new tax year to transfer.

If I wanted to I could open at least two new ISA's in any tax year, one to transfer existing balances to and another to fund new money with? I suppose this would depend on there being two really good offers and being torn as to which one to choose? BUT new money can only be put into one of them?

Funkyfreddy and talexuser mentioned that the old accounts would automatically close but I guess this is only if you transfer out every penny? I didn't realise that - I just transferred a rounded up amount and left small amounts in my old existing accounts to keep them open. Would it be wiser for me to shut those old accounts (one with Nat West and the other with National Savings)?

Thanks again for your time :T

soulsaver

cemeterybird wrote: »

Thanks for all your replies to my orginal question, also to catslovelycats, cslogg and gregmac666 for the additional queries.

I think things are a little clearer now - can I run what I think by you all to check if I've got things right please?

Although it is not absolutely necessary (except with a couple of exceptions), it is probably best to wait until the new tax year to transfer.

If I wanted to I could open at least two new ISA's in any tax year, one to transfer existing balances to and another to fund new money with? I suppose this would depend on there being two really good offers and being torn as to which one to choose? BUT new money can only be put into one of them?

Funkyfreddy and talexuser mentioned that the old accounts would automatically close but I guess this is only if you transfer out every penny? I didn't realise that - I just transferred a rounded up amount and left small amounts in my old existing accounts to keep them open. Would it be wiser for me to shut those old accounts (one with Nat West and the other with National Savings)?

Thanks again for your time :T

Unusually polite, much appreciated.

intalex

rb10 wrote: »

However, bear in mind that transfers can take a few weeks to go through, so to minimise the loss of interest during this period, it's best to start the transfer process a few weeks before maturity of the existing account, unless one of the following applies:

1) You are transferring to Halifax or Nationwide - both of them will pay interest from the day they receive your transfer request form

Pretty useful insight this - I have a Santander Flexible ISA with its 1-year bonus rate about to run out in 3 weeks, and I've just heard that Halifax are coming out with a new ISA tomorrow with a decent rate.

Am thinking of opening the Halifax ISA and processing the transfer request early next week. Any ideas if Santander will continue accruing interest until the balance is actually transferred, while Halifax also pay interest while the transfer process goes on (i.e. double interest)?

rb10

intalex wrote: »

Am thinking of opening the Halifax ISA and processing the transfer request early next week. Any ideas if Santander will continue accruing interest until the balance is actually transferred, while Halifax also pay interest while the transfer process goes on (i.e. double interest)?

Yes that is correct. Both banks will pay interest until the Santander ISA is closed.

Catslovelycats

thanks cemetry for your original post and to everyone who has posted a reply/question
this post has taught me loads about ISAs that I never knew before
and I've gone from feeling embarrassingly ignorant to more slightly knowledgeable
thanks one and all!

gregmac666

I echo the above post - thanks for all the advice from the board members, and particularly from me to those that replied directly to my own posts. very helpful indeed.

It looks like I just need to find out if my current ISA had a penalty for closing early or a reward upon maturity, which I think it didn't. If not I can look at transferring anytime now & pay into that new ISA for the following 12 months or transfer again, etc.

Great stuff folks!

bobbyposh

Always remember when transferring an ISA to a new provider that there is a period of lost interest between the time when one ISA closes and the other one opens. This could be a week or more, so unless the interest rate on the new ISA is significantly better than on the old one it is hardly worth doing, as the time taken to recoup the lost interest could extend to many months, by which time an even better ISA could come along.

As an example, suppose you want to transfer £10,000 from your existing ISA at 2.6% to a new one at 2.75%. This will give you an extra £15 per year interest. However, during the transfer process you could lose 7 days interest on your current ISA, which comes to just under £5. So it will take four months just to put you back where you started! By this time, particularly if interest rates start to push up, there could be better deals coming along.

Just a point to bear in mind when considering whether it's worth the hassle or not.

Stompa

bobbyposh wrote: »

Always remember when transferring an ISA to a new provider that there is a period of lost interest between the time when one ISA closes and the other one opens.

There are some providers where that's not the case though (supposedly!):

http://www.halifax.co.uk/isas/cash-isa-promise/

bobbyposh

I have transferred several ISAs over the years and have never found any that pay interest during the actual transfer period. If any do exist I would imagine they aren't very competitive on rates, so you are probably better off staying where you are anyway!