Cash ISAs: The Best Currently Available List

dcs34

More general question on how ISAs work.

Am I correct in thinking if I've:

• Opened a new cash ISA this tax year,
• Paid £16,000 of new ISA money into it (with £4k to a LISA),

That I can:

• Transfer existing ISAs opened in previous tax years into this ISA, 

But I can't:

• Open another new cash ISA this tax year and transfer the current cash ISA to that account?

The Gov UK ISA page seems to imply you can do unlimited transfers, but general guidance online says can only open one ISA of each type each year - but it isn't always clear if transfer to new accounts is the same thing as opening new accounts.

doodlector

You can open another new cash ISA this tax year and transfer the current cash ISA into the account.  The restriction is that if you transfer from a cash ISA which you added to already this year then you need to transfer all the money you added this year. 

dcs34

doodlector said:

You can open another new cash ISA this tax year and transfer the current cash ISA into the account.  The restriction is that if you transfer from a cash ISA which you added to already this year then you need to transfer all the money you added this year. 

OK, so effectively I can open two in the same tax year provided for the second I transfer the full balance from the first one and close it?

doodlector

dcs34 said:

doodlector said:

You can open another new cash ISA this tax year and transfer the current cash ISA into the account.  The restriction is that if you transfer from a cash ISA which you added to already this year then you need to transfer all the money you added this year. 

OK, so effectively I can open two in the same tax year provided for the second I transfer the full balance from the first one and close it?

Yes, that's right. You can only subscribe new money (from your £20k allowance) into one of each type of ISA each year.  If you decide to transfer from a cash ISA you've already subscribed to in the current year then you've got to transfer all of the money you added this year so you don't break that rule.

Shedman

Eirambler said:

RBS/NatWest being RBS/NatWest I see. Knowing them, there'll be interest paid until the formal start date alright, but probably at some lower rate that's hidden away in the corner of a Ts&Cs webpage somewhere.

My advice would be to do yourself a favour and just use a bank that's fair and transparent, not that bunch of absolute chancers.

My RBS 2 Year ISA is now open and I can see it on the app.  Despite no funds in there yet (as doing a transfer in) it states on the account under View Interest Rate tab "Your interest rate is 5.90% tax free. This is based on your balance at close of business on 19 July 2023".

So seems clear to me you get the correct interest rate from date of opening

amanda1024

Lifetime ISAs - does anyone know why their rates are so much lower than 'standard' cash isas? Given that in many cases the money will be locked up for longer (for me it'll be 25 years) I don't get why rates are so low!

ForumUser7

amanda1024 said:

Lifetime ISAs - does anyone know why their rates are so much lower than 'standard' cash isas? Given that in many cases the money will be locked up for longer (for me it'll be 25 years) I don't get why rates are so low!

Possibly to cover additional admin overheads.

Also, you have to recognise that you get a 25% bonus from the government - which is effectively 25% interest in addition to the rate the provider gives you.

doodlector

ForumUser7 said:

amanda1024 said:

Lifetime ISAs - does anyone know why their rates are so much lower than 'standard' cash isas? Given that in many cases the money will be locked up for longer (for me it'll be 25 years) I don't get why rates are so low!

Possibly to cover additional admin overheads.

Also, you have to recognise that you get a 25% bonus from the government - which is effectively 25% interest in addition to the rate the provider gives you.

Sorry, but I think this is misleading.  The 25% bonus is paid when you put the money into the LISA (a one off bonus).  The interest rate is then paid every year which for a LISA would be up until you can access it when you are 60 yrs old.

I suspect the low rate of LISA interest is at least partly down the the 'captured market' and lack of competition.

Silverweed

Virgin Money - anyone know how responsive they are via secure message please?

ForumUser7

doodlector said:

ForumUser7 said:

amanda1024 said:

Lifetime ISAs - does anyone know why their rates are so much lower than 'standard' cash isas? Given that in many cases the money will be locked up for longer (for me it'll be 25 years) I don't get why rates are so low!

Possibly to cover additional admin overheads.

Also, you have to recognise that you get a 25% bonus from the government - which is effectively 25% interest in addition to the rate the provider gives you.

Sorry, but I think this is misleading.  The 25% bonus is paid when you put the money into the LISA (a one off bonus).  The interest rate is then paid every year which for a LISA would be up until you can access it when you are 60 yrs old.

I suspect the low rate of LISA interest is at least partly down the the 'captured market' and lack of competition.

This is why I didn't say 25% annual interest, but perhaps I could've been clearer.

My point is whatever you put in the LISA is inflated by 25%, and you get the interest paid by the provider each year. Pretty good deal IMO