ISA Confusion - HSBC

Sam-1990

Hi,

I setup a Fixed Rate Cash ISA in April last year, it is now about to mature and had £5100 invested in it. (Current interest rate of 2.4%)

HSBC have now sent me a letter saying it is about to mature and will be put into a Variable Cash ISA unless they are notified other-wise. (Current interest rate 0.2%)

Will I be paid the 2.4% interest on my savings... then it's all transferred into this new variable interest account? The guy on the phone didn't seem to know!

I also have £6000 sat in HSBC online bonus saver which I believe is currently earning me around 0.75%. I'd like to put these two sums together.

What should I do? I would like all my money to be in one lump sum earning as much tax-free interest as possible. But HSBC are useless and just continue to try and sell me credit cards, loans, advanced accounts and offer very little guidance or help in terms of the best way for ME to get the most out of my money.

I was hoping somebody here could give me a hand in understanding this and helping point me in the right direction in where to put my money and what to do with my current ISA which is due to mature. I am happy to tie it up for a year (maybe 2 if worth it).

xylophone

The interest will be paid at maturity.
If you don't want to stay with HSBC look for another provider and ask the new provider to arrange the transfer. Santander have brought out a new range and there are other options here http://www.moneywise.co.uk/best-cash-isa-rates - check which ones allow transfers in.
You will be able to open a new Isa after 6 April with £5640 of the money in your bonus saver.

Sam-1990

So when the 2.4% interest is paid and the account is transfered into a Variable Rate ISA.

I can just take it out and do with it as a wish. There is no point me leaving it in an account for 0.2% interest.

innovate

Sam-1990 wrote: »

So when the 2.4% interest is paid and the account is transfered into a Variable Rate ISA.

I can just take it out and do with it as a wish. There is no point me leaving it in an account for 0.2% interest.

You would not normally "take it out" - - assuming "it" refers to your ISA. You would open another ISA and request the ISA provider to transfer your money.

If you "take it out" yourself, you have lost the ISA wrapper forever and you cannot get it back. Of course, if you need the money, than that's fine to do.


Make sure you don't request the transfer to take place before maturity of your existing ISA, else you will pay a big penalty (often 160 days of interest). Your new ISA provider should guarantee you interest from the day they receive the transfer form, regardless of how long the transfer actually takes. They should also keep you in the picture about the transfer.

evenasus

Sam-1990 wrote: »

So when the 2.4% interest is paid and the account is transfered into a Variable Rate ISA.

I can just take it out and do with it as a wish. There is no point me leaving it in an account for 0.2% interest.

If you 'take it out' it will lose the ability to get tax free interest.

If you wanted to continue receiving tax free interest in an ISA, you would have to find another ISA account with a better rate and if it's with another provider, request them to transfer your HSBC ISA to it.

After the 6h April you would also be able to open another ISA with up to £5640.

At the moment Santander are offering a 2 year fixed ISA at 4%.
see this thread... https://forums.moneysavingexpert.com/discussion/3830443

evenasus

innovate beat me to it

Sam-1990

OK.

So can I do this...

1. Await for maturity of my savings...

2. On april the 6th, transfer the matured ISA along with my savings with the recently added interest to a new ISA aswell as input another £5600 allowance into the ISA.

This would then leave me with a good interest rate ISA with all my savings in one safe place earning me a good rate (depending on the company I go with and if they accept transfers...)

blueberrypie

Yes, you can do that. And if the provider you choose for your 12/13 allowance doesn't accept transfers, you can put your 12/13 allowance with them and transfer the funds from all your other ISAs to another provider.

Vortigern

Sam-1990 wrote: »

I setup a Fixed Rate Cash ISA in April last year, it is now about to mature and had £5100 invested in it....

On what precise date in April 2011 did you open this ISA? - and have you paid in any money after 6th April 2011? The reason I ask is that £5100 was the ISA limit for the 2010/11 tax year - so if your only ISA deposit was before 6th April 2011, you haven't used your 2011/12 allowance. In this case you should get a chunk of that £6000 into an ISA now, before 6th April, and the rest of it into an ISA after that date.

Sam-1990

2nd of April 2011 it was opened... does this mean I can open another ISA before the 12/13 allowance!?

So confused!

blueberrypie

Sam-1990 wrote: »

2nd of April 2011 it was opened... does this mean I can open another ISA before the 12/13 allowance!?

So confused!

Did you put any money into it on or after April 6th, 2011? If so, you have "subscribed" to that ISA. If you haven't, then you have not subscribed to it for the 2011/12 tax year, and you still have your 2011/12 allowance.