Santander ISA rate dropping after 1 yr

joyceyjo

I opened isa with Santander 8th April 2010, £5100 - 3.2% at the time. My rate is due to drop to 0.1% after 1 year.
I read all about their new loyalty isa etc and thought surely i can have it changed over.
I know the new loyalty isa does not accept isa transfers in but i would have thought this was a redesignation rather than a transfer in as its all within the same company.
So i phoned Santander and was told basically that my rate will drop to 0.1% and because the balance is less than 14k the isa's avaialble are 0.5% on an instant access or 3.7% or a 2yr fixed.
So basically what they are saying is "go ahead transfer it out elsewhere"! They spent most of the time ignoring my request to tell me the options about my maturing isa and trying to sell me an isa for new money for the new tax year.
Don't they realise it would make sense to try and hang onto isa's they already hold as well as trying to get in new money.
Off to Halifax it is then-

the_sherrif

Hi there,I am in a similar position to you can you tell me do Santander take a fee for the tranfer.Thanks in advance tart6000.

joyceyjo

No fee as the Santander isa is instant access. Halifax Isa Reward seems to be the best out there for isa transfer in. And the offer an interest rate promise that they will pay you the reward rate from the date they receive your isa transfer form. So even if it takes Santander a couple of weeks to transfer your isa you will still be getting interest with Halifax.

desperado54

Hi. I'm in a similar position. Got an isa with santander and the interest rate is about to drop. Interested in their loyalty ISA but they dont accept transfers in so considering withdrawing lump sum from existing isa and using it to open new loyalty isa account. I've already got other accounts with Santander so will benefit from a good rate. 3.5% i think. Can anyone see any pitfalls with this approach? Thanks.

blueberrypie

desperado54 wrote: »

Hi. I'm in a similar position. Got an isa with santander and the interest rate is about to drop. Interested in their loyalty ISA but they dont accept transfers in so considering withdrawing lump sum from existing isa and using it to open new loyalty isa account. I've already got other accounts with Santander so will benefit from a good rate. 3.5% i think. Can anyone see any pitfalls with this approach? Thanks.

If you have paid any new funds into any ISA in the current tax year, you are not allowed to pay new funds into any other ISA in the current tax year.

If you have not put any new money into any ISA since April 5th, 2010, and you do not plan on using your 2010/11 ISA allowance, then go ahead and withdraw your funds and put them in the Loyalty ISA. Bear in mind that if you have £5100 + interest in the current ISA, you will only be able to deposit the £5100 (because that's the limit of the 10/11 ISA allowance).

If you withdraw the money and pay it into any ISA after April 5th this year, it will reduce your ISA allowance for 2011/12.

For most people, the best option is to transfer the funds to another ISA which allows transfers in, thereby keeping their current/next year's ISA allowance intact.

okydoky

desperado54 wrote: »

Hi. I'm in a similar position. Got an isa with santander and the interest rate is about to drop. Interested in their loyalty ISA but they dont accept transfers in so considering withdrawing lump sum from existing isa and using it to open new loyalty isa account. I've already got other accounts with Santander so will benefit from a good rate. 3.5% i think. Can anyone see any pitfalls with this approach? Thanks.

Yes - pitfall is you will use almost all your allowance for 2011/2012 as you can only put in £5340 into a cash ISA for the new year.:(

Stompa

joyceyjo wrote: »

No fee as the Santander isa is instant access. Halifax Isa Reward seems to be the best out there for isa transfer in. And the offer an interest rate promise that they will pay you the reward rate from the date they receive your isa transfer form. So even if it takes Santander a couple of weeks to transfer your isa you will still be getting interest with Halifax.

I've recently done precisely that. Sent off transfer form on 1st Mar, and started earning Halifax interest from 3rd Mar, funds appeared in my Halifax ISA on 8th Mar. Shame it didn't take longer, I would have preferred to have been simultaneously earning interest at Santander & Halifax for as long as possible!

desperado54

blueberrypie wrote: »

If you have paid any new funds into any ISA in the current tax year, you are not allowed to pay new funds into any other ISA in the current tax year.

If you have not put any new money into any ISA since April 5th, 2010, and you do not plan on using your 2010/11 ISA allowance, then go ahead and withdraw your funds and put them in the Loyalty ISA. Bear in mind that if you have £5100 + interest in the current ISA, you will only be able to deposit the £5100 (because that's the limit of the 10/11 ISA allowance).

If you withdraw the money and pay it into any ISA after April 5th this year, it will reduce your ISA allowance for 2011/12.

For most people, the best option is to transfer the funds to another ISA which allows transfers in, thereby keeping their current/next year's ISA allowance intact.

Haven't put any new money in, in the current financial year and unlikely to use next years allowance. So can i withdraw £5100 (i have £5100+)this financial year and use it to open the new loyalty isa this year or can i not open the new one until next financial year? Also, if i can withdraw and open in the same year can i do the same next year?

desperado54

okydoky wrote: »

Yes - pitfall is you will use almost all your allowance for 2011/2012 as you can only put in £5340 into a cash ISA for the new year.:(

Is it not possible to withdraw from the existing account and open the new one in the same year i.e. this year?

Juanito

You can do but its not advised as you will lose your free tax allowance for the year u saved. Why not just transfer your current ISA to Halifax Direct Reward ISA giving you 3.00% tax free. Then open a new loyalty flexible ISA at Santander giving you 3.50% that is if your a loyal customer and contribute to that for 2011/2012 tax year. Then at the end of that tax year you can join the two ISAs up by transferring them both into the same one

tanith

I have two ISA's already with Santander one from this years allowance £5100 and an accummalated one from several years ISA's quite a large amount in total, but I am going to have to move it all away from Santander to put it all together in a higher paying Cash Isa.. I'd prefer to keep it with Santander but will have no option but to move it probably to Halifax.. seems daft to me that they would let me so easily take my ISA's elsewhere..