Do I open a new ISA?

CrowsNest_2

Hi,

I opened a Barclays Loyalty Reward ISA in mid-March this year (2012). After that I put in £3000 and made just 99p at the beginning of April. This is the only interest I've made with the 2011/12 ISA I opened but given I did it so late in the day that might be why.

Now a new financial year has begun (2012/13), I was wondering if I should (allowed?) open another Barclays Loyalty Reward ISA (just one month later!) and to put the after-mentioned £3000 savings in there instead given the ISA I got a month ago is now (I think) defunct.

This is the problem, if the ISA I got this March is still going to pay some interest then there's probably no point in opening another ISA account. But if its going to become a sort of tax free savings void where nothing or very little can be gained then maybe I should open a new one.

Apologies for my ignorance on this I was molly-coddled into getting one without reading or knowing the T&Cs. Thanks for any advise!

N.B. I should add I've got no interest in changing to another banks ISA, I'm happy with Barclays I'm just not sure whether to open a new one!

psychic_teabag

You had your money in the account for 2 weeks. What were you expecting ? A full year's interest ? That said, 99p for 2 weeks would be £25.74 per year which corresponds to an annual rate of 0.86% on £3000 - not great.

Don't worry about being caught out : I noticed that quite a lot of advertising seemed to focus on the fact that it was tax-free without mentioning the actual rate they were offering.

You don't need to switch bank to use an ISA from another provider. The Barclays web front page proclaims 3.05% ISA rate for existing customers - that's not a bad rate. (Not great for a "loyalty" product, when Nationwide are offering 4.25%, but not bad as instant-access ISAs go.) I don't see anything on the web mentioning ISAs down at the 1% area.

The ISA rules allow you to open another ISA : but Barclays might have their own rules about whether you can have two concurrently. You ought to be able to add more to the existing ISA, but first check the interest rate you're getting. Go in and ask for it to be upgraded to this 3% rate if you qualify and you're not already getting that rate.

sueeve

Did you check the interest rate? If not, do so now and then see if it is competitive. If it is OK, perhaps over 3%, then I would add this years' savings, when you have some to spare. If not, look for another ISA for this year, not forgetting to check if you are allowed to transfer last years money into it. If the interest rate is much over 3% check that you have not tied yourself into an account for a fixed term. Read the column on ISAs on this website

Scarpacci

Your old ISA is fine for now. The low amount of interest is probably because of how little time the money was actually in the ISA before interest was paid. Like many ISAs, it will have a time-limited bonus but that is usually for twelve months, it does not just end when the tax year ends. So your £3,000 is currently earning the stated rate when you signed up and is still enjoying the tax free benefit. Though it still might be wise to check what rate it's paying.

Barclays do not allow transfers in any way, so you wouldn't be able to move the £3,000 to a new Barclays ISA through the correct channels (ie. not withdrawing it and paying it new ISA, but using the transfer forms).

If you have any new money to put into an ISA, it may be best to open a new ISA . There's no reason to move the £3,000 until the 1 year anniversary for you opening the ISA. So March next year, that's when you want to move it.

CrowsNest_2

Thank you psychic teabag, sueeve and Scarpacci for your help, it clears a lot of questions up for me!