Natwest ISA interest rate change - get out clause ?

Dubito_ergo_sum

Hi,

I have several years worth of ISA in an old NatWest Cash ISA Plus account which has for years paid 3.01. I have today received a letter stating that they are dropping the rate to 2.70%. I have never transfered ISAs before so I apologise in advance if this is a silly question: Unfortunately Ive already deposited some money in this financial year but im wondering if due to the rate change there is something like a get out clause ? Like with energy companies when they put their rates up you are allowed to leave in x days without incurring any penalties and they will still honour the old rates until you leave. Ie due to the rate change is there a window of a few weeks when i am allowed to open a new isa for 'new money' for this year or can i only transfer as already deposited some this months ?

Thanks

innovate

Any transfer does not count towards your annual limit, and you can open as many ISAs to transfer into as you like. You need to check that the ISA does allow transfers-in. Never attempt to transfer an ISA yourself - - always ask the receiving bank to make the transfer.

Does your existing ISA have any clauses that prevent you from getting your money transferred?

Dubito_ergo_sum

Sorry if my post is a bit confusing - long day....

My question only refers to this years deposit.
Isa accounts for 'new money' pay better rates than the ones that allow transfers in. I have only deposited £100 a few days ago and Im wondering if
a) I need to transfer this £100 to a new provider and then pay into the new account which would mean lower rates as i need an account which allows for transfers in or
b) due to them changing rates i am allowed to open a new money only isa account despite having deposited the £100 this year

Sorry does this make a bit more sense ?

edit: this is an old account from 2007 or 2008 and it was never a fixed rate account so afaik never had any penalties or anything

innovate

Not entirely sure I can follow you - are you saying your total ISA balance is £100, all paid in this financial year? If no, why would you leave any of the old money in a 2.7% ISA? You can get at least 3% in an instant access ISA, and a lot more if you can lock your money away for a couple of years.

You can transfer all or some of your previous years' ISA. When transferring current year money, all of that money £100 in your case) needs to be transferred. That new money does not have to be transferred to the same ISA as you get the previous years' money transferred to.

There is no "get out clause" that allows you to open a second 'new money only' ISA in the same tax year because interest rates have been dropped.

Mikeyorks

Dubito_ergo_sum wrote: »

Sorry does this make a bit more sense ?

Yes. As you've contributed to an existing ISA - you have 2 choices :

1. Transfer your whole ISA to a better rate somewhere else
2. Transfer just the £100 elsewhere.

If you'd opened a completely new ISA for your £100 ..... you could have cancelled within 14 days. You can't do that with an existing ISA

Choice 2 - above - doesn't have much merit? Whilst you may get a better rate for a non transfer ..... you're then leaving previous years languishing at the new and poorer rate?

And there are no circumstances where you can withdraw the £100 and pretend it didn't happen - as you have old money in there. Had the £100 been on its own in a new ISA then you could just close it and go elsewhere - under the self transfer rule. But you lose out where there is old money involved in the same account.

Lansdowne

Mikeyorks wrote: »

Yes. As you've contributed to an existing ISA - you have 2 choices :

1. Transfer your whole ISA to a better rate somewhere else
2. Transfer just the £100 elsewhere.

Well there's another:

3. Transfer the old years' money to a better rate such as a fixed term ISA, and separately transfer the £100 to an ISA that will allow further contributions during this year.

But as far as I can see you don't have the option of going to something like the Nationwide 4.25% because it doesn't allow transfers in.

home_alone

I got the same letter it seems that nat west are content to live on Bank of England money and sod the customers I moved out all of my e savings last year when the bonus ended and now I will do the same with ISAs.

badger09

Dubito_ergo_sum wrote: »

Hi,

I have several years worth of ISA in an old NatWest Cash ISA Plus account which has for years paid 3.01. I have today received a letter stating that they are dropping the rate to 2.70%. I have never transfered ISAs before so I apologise in advance if this is a silly question: Unfortunately Ive already deposited some money in this financial year but im wondering if due to the rate change there is something like a get out clause ? Like with energy companies when they put their rates up you are allowed to leave in x days without incurring any penalties and they will still honour the old rates until you leave. Ie due to the rate change is there a window of a few weeks when i am allowed to open a new isa for 'new money' for this year or can i only transfer as already deposited some this months ?

Thanks

I'm afraid there isn't a get out clause, but why don't you vote with your feet (or rather, with your ISA:p)

If you need access to your funds, you could transfer it all to an Instant Access ISA such as Santander 3.3%, Principality or Nationwide (needs a card account) both paying 3.1%, and carry on paying in this year's allowance.

Or if you don't need access, transfer some to a better Fixed Rate ISA for one or more years, and transfer some (at least the £100 current year's subscription) to an Instant Access ISA and carry on paying in this year's allowance.

Whichever you choose, you can achieve more than 2.7% on all your ISA funds :T

Tessa_Gordon

Hi,
I understand the issue as I have the same problem. I am aware of better rates such as Santander but when starting to apply on line I have to agree that I have not paid into an ISA in this current year. I have, therefore am I stuck with Natwest at this low rate. Are there any accounts that will accept me even though I have already paid into an account in the 2012/2013 tax year?

innovate

Tessa_Gordon wrote: »

Hi,
I understand the issue as I have the same problem. I am aware of better rates such as Santander but when starting to apply on line I have to agree that I have not paid into an ISA in this current year. I have, therefore am I stuck with Natwest at this low rate. Are there any accounts that will accept me even though I have already paid into an account in the 2012/2013 tax year?

You are perfectly within the rules to transfer your entire 2012/2013 ISA to another provider. You still only have one ISA, you are just changing provider. This means you can only go for an ISA that allows transfers-in (i.e. the Nationwide 4.25% is out of bounds for you now).

You indicate on the transfer form that you want the ISA with Natwest to be closed. Do not make any payments into the ISA with your new provider until the transfer has been completed.

badger09

Tessa_Gordon wrote: »

Hi,
I understand the issue as I have the same problem. I am aware of better rates such as Santander but when starting to apply on line I have to agree that I have not paid into an ISA in this current year. I have, therefore am I stuck with Natwest at this low rate. Are there any accounts that will accept me even though I have already paid into an account in the 2012/2013 tax year?

If you are applying to transfer to Santander, then it doesn't matter that you have already paid into an ISA in this current tax year. You must however transfer all your current year's contributions together.

Any account that allows transfers in will accept you - not just Santander. Once the transfer id complete (using the new provider's process) you can carry on paying in, up to £5640