2012/13 ISA closed.... now what?

snomys

Today I tried to pay some money into my Skipton society Cash ISA, and the site said this is not possible.

So I just phoned them, and they said "this ISA is now closed, as its a fixed rate ISA we can close it at any time, and your money stays in there until 2013 and you cannot deposit anymore".

!!!!!!, I have just put in 2500 in this tax year, so now what do I do, I want to pay into my ISA the 5640 for a tax year, and they wont let me?

So I said, I want my money back and then close this account, to which I was told, that will incur a fee and you will get back less than the 2500 thats in the account already.

My questions:
1. Is this allowed?
2. If they're right, and I have to swallow it, can I just go and open another ISA with another company?
3. Are all fixed rate ISAs under the same rules? So they could offer a rate of 25% to draw customers in, if you just deposit a monthly sum, then they can just close it after the first day?

HELP!

Thanks

Lokolo

1. Yes
2. No
3. Not the exact same rules, but the general limitations and benefits, yes. You should read the T&Cs of the account in the future.

Fixed term accounts usually come in 2 different ways. 1 is that you are only allowed one deposit. The other (which is the case for you) is that the fixed term accounts are open to additional deposits until the offer is closed (which is usually determined when the bank get the amount of money they require).

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ISA allowance can be used across multiple accounts IF they are with the same provider and the provider allows it. So you could open another Skipton ISA and use the rest of the allowance there, but thats only if they allow it.

You cannot now go and open a ISA with, for example, HSBC and use the rest of your allowance there, unless you transfer the Skipton ISA and pay the penalty.

psychic_teabag

With (2), if you close the account and withdraw the money, you cannot open another ISA anywhere this year (unless you want to try out the "self transfer" get-out).

But you can implement the closure via an ISA transfer - while that will still incur the early-closure penalty, your account will still be an ISA. So you could transfer to an instant-access ISA and then add funds.

What you might consider doing instead is build up the ISA deposit in (taxable) regular-saver accounts. These tend to last a year, and pay a higher rate (even after tax is deducted). When they mature, you will have a lump-sum to deposit into an ISA (fixed-term if you wish) and then you can start again to build up the ISA deposit for the following year.

snomys

Could you give me an indication of some good rates/offers on these regular-saver accounts that are around right now.

psychic_teabag

Sorry, yes, I should have pointed you at the thread : https://forums.moneysavingexpert.com/discussion/608697

See also Martin's guide at http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

Many of the reg. savers seem to be be branch-based - they want you in front of an "advisor" so they can sell you additional products.