Cash ISA transfer help please

zyndor

Good morning all,

I want to bring my ISAs up to snuff and I was hoping to get a clear understanding of transfers before I get started.

Let's suppose I have 3 cash ISAs from the 3 previous tax years, 2010(/11), 2011(/12), and 2012(/13). These are all instant access.

Let's also suppose that 2010's ISA has dropped to 0.1% and there's some cool new variable rate ISA that has a better rate and allows transfers in from previous year's allowances.

The question, and it might be naive but please bear with me:

Is transferring the 2010 ISA going to allow me to re-invest (if you like) 2010's allowance at the 2013's rates? (i.e. will I still have 2013(/14)'s £5760 allowance to fill up on top of that [presumably in some other ISA, with some other provider]?)

The reason I'm asking this is because it sounds almost too good to be true (and don't see why everybody isn't doing it), and otherwise I don't see why would it be different from taking the money out* from the 2010 ISA and putting it in a 2013 product (without the transfer malarkey**).

* said to be an absolute NO-NO by MoneySupermarket.
** said to be a roundabout and complicated process by MoneySupermarket.

Also, a friend has warned me that they tried the transfer before, but it took long, has eventually failed and they've lost their allowance for the year and the interest (IIUC this means the interest penalty as this was a fixed rate ISA in their case). Sadly, the exact circumstances of this scenario aren't clear to me, but it inspires caution.

So, how do cash ISA transfers work?

Thank you for your input in advance.

innovate

Of course cash ISA transfers work, tens if not hundreds of thousands are being done each year. Perhaps you should read the ISA transfer guide, so you can understand e.g. why you wouldn't normally want to take money out of an old ISA.

http://www.moneysavingexpert.com/savings/cash-isa-transfers

If properly done, there is no way you can lose your allowance for the year.

There is also a special ISA board on here - browsing through that will probably answer a lot more questions for you.

Glen_Clark

zyndor wrote: »

Good morning all,

taking the money out* from the 2010 ISA

* said to be an absolute NO-NO by MoneySupermarket.
.

taking the money out is an absolute No-No because you can't put it back in. You can only leave it in and transfer the ISA to another provider (at their interest rates)

penny_pincha

I think what zyndor is asking is, he wants to open a new ISA to transfer in old money and open a new ISA to pay in new money.

He has reservations about the length of time or the cocking up of transferring as a friend has had problems. I can only speak from my own personal circumstances and can vouch that I have had no problems transferring between providers and within the same provider to improve ISA rates. I think it may depend on the providers involved.

robtgossard

Moving your cash ISA is subject to a lot of restrictions. I got to know from a friend that you can transfer an ISA and open a new one in the same year.

innovate

robtgossard wrote: »

Moving your cash ISA is subject to a lot of restrictions.

It's really very simple if you follow the formal transfer process. Filling in the form and sending it off takes just about no time.
Of course it helps when you know whether your ISA is instant access or fixed term etc.
May be read the ISA transfer guide on the main site.

robtgossard wrote: »

I got to know from a friend that you can transfer an ISA and open a new one in the same year.

Yes, this can be done.

Griffin78

I have a similar'ish question...

I have two instant access Cash ISAs with the same provider, one a much better rate than the other.
ISA 1 has £3800 in it from 2011/12 and has poor rates.
ISA 2 has full allowance from 2012/13 and has good rates.

Can I transfer ISA 1 into ISA 2 and still you use my full 2013/14 allowance or would I be restricted to only adding a further £1900 to ISA 2 after the initial transfer?

Thanks

innovate

Griffin78 wrote: »

Can I transfer ISA 1 into ISA 2 and still you use my full 2013/14 allowance or would I be restricted to only adding a further £1900 to ISA 2 after the initial transfer?

Thanks

Transfers of old ISAs (incl their interest) never counts towards your annual allowance. You must ask the provider of the new ISA to make the transfer, though - never try to do it yourself.

Whether your ISA 1 can be transfered into your ISA 2 depends on whether ISA 2 allows transfers in.