Transferring Cash ISA - is it best to transfer straight away, and lose interest?

elizaco

A currently have approx £35,000 in Furness BS New Century Cash ISA. I know it is a 100-day notice account, but can't find the exact T&C's as opened it years ago. It is only paying 2.09%, so I am thinking of transferring the lot to the Birmingham Midshires 5-yr 5% ISA. Haven't got the transfer form yet, but I assume it will ask me if I want to transfer the cash straight away, thus losing 100 days interest, or wait until the notice period with Furness is over. I'm guessing it would make sense to transfer it straight away as the difference in interest would out-weigh any penalties, but could someone just confirm this please!!

Ilya_Ilyich

Assuming a current value of £35,000, that if you transfer without notice you lose 100 days interest, and with a wee bit of rounding:
Transfer value today (ie value 100 days ago) = £35,000 / (1.0209^(100/365)) = £34,802
Transfer today + 100 days of 5% interest = £34,802 * 1.05^(100/365) = £35,270
vs
Give notice now and transfer in 100 days: Transfer value = £35,000 * 1.0209^(100/365) = £35,199

So yes, transferring now would leave you better off by about £70 a hundred days from now.