ISA issues

podd86

Hi guys,

In December I opened a northern rock 1year fixed rate e-ISA paying 3.30%, for the last 2months I have been paying into it every payday no issues, tried today to be told that the account has now closed and no more payments will be accepted. The lady on the phone said last months payment shouldn't have been accepted but has :question:

Now what can I do going forward? Im a complete novice with regards to ISAs, can I move it elsewhere and still have the option of taking a new ISA when the new allowances start? Shall I just leave it and take a new one next month?

Thanks in advance

Lokolo

ISA rules mean that the only place you can open another ISA from now until next tax year (April 6th) is NR.

However NR may not allow you to open another ISA.

As it will be in a fixed rate you can move it to another ISA and continue depositing into it, however there will be a penalty to do so.

You shouldn't be opening fixed term accounts if you plan on depositing more than once. If you open a fixed term account on April 6th (new tax year), and deposit £1k, you will be unable to use the rest of your allowance elsewhere.

AirlieBird

There's not a lot you can do, I'm afraid. You're not the first to fall foul of this, and won't be the last. I really wish that HMRC would clamp down on this practice and insist that providers must offer an alternative ISA if you haven't used all your allowance. Some providers (Nationwide, Marks and Spencer, Newcastle BS) do allow you to spread your allowance over different accounts. In fact as Virgin Money want to be seen to be 'different' and 'fair' why don't you send some feedback to them to suggest this?

https://uk.virginmoney.com/virgin/forms/northern-rock-feedback2.jsp

Fixed rate ISAs are for lump sums. If you want to deposit regularly then go for an easy access ISA.

blueberrypie

Podd86 wrote: »

In December I opened a northern rock 1year fixed rate e-ISA paying 3.30%, for the last 2months I have been paying into it every payday no issues, tried today to be told that the account has now closed and no more payments will be accepted. The lady on the phone said last months payment shouldn't have been accepted but has :question:

Now what can I do going forward? Im a complete novice with regards to ISAs, can I move it elsewhere and still have the option of taking a new ISA when the new allowances start? Shall I just leave it and take a new one next month?

You opened a fixed-term ISA, and NR's t&c are that you can deposit funds into one of those up to 30 days after it's opened. So the woman on the phone was quite correct.

You can close a fixed-term ISA early, but there is a penalty, and you will lose (in this case) 120 days interest. You haven't even had the account that long.

How much do you have to put into an ISA now? Do you think you will use your full ISA allowance for 2012/13? If it's a small amount and you don't think you'll use the full allowance, the easiest thing to do is probably hold onto it until April 6th and open another ISA (*not* a fixed-rate one if you want to save a bit at a time!)

You could phone NR and explain that when you opened the ISA, you didn't realise that you wouldn't be able to continue to contribute to it, and ask nicely if they would be willing to simply transfer your funds into one of their easy-access ISAs. Lower interest rate, but you could add further funds to one of those. No harm in asking.

podd86

As it stands there is 2k in there, 500sitting in my bank acc waiting to be moved and another 1500 will be available on the 28th march. Next years allowance will be fully used. I will give nr a call and see what they say. Thanks for the advice