Quick question

Spivved1987

I apologise if this has been answered before.

Why do so many ISA providers refuse to accept transfers-in? I have tried to find out the rationale behind this, but can't find out specifically. After all, isn't it just a cash transfer from one provider to another? Or is it more complicated and therefore administratively expensive?

Gromitt

I'd say its because of the interest payable. Some people can have 20K+ in ISAs and they don't want to pay the interest on that.

The banks that provide less interest like 2.7% typically do allow transfers-in.

Some banks only offer high interest ISAs in the hope you'll also take other products from the same bank.

VT82

I'd also guess that the bank assumes more 'new money' will hang around after the rate drops, than money from people transferring - after all, people transferring into it are demonstrating that they are on the ball and are bothered about the rate they receive. A higher percentage of 'new money' could be from people who check the best buy tables once every few years and then forget about it, as opposed to the percentage of money from transfers.

Probably not the main reason, but their product people will price it in for sure.