Not accepting isa transfers

DietIrnBru

Probably a simple answer no doubt - but why do providers not accept transfers in of old cash ISA's?

ses6jwg

Pricing strategy.

When you allow transfers in, the majority of transfers in will come from those who already hold ISAs with that institution simply "upgrading". There is no advantage to a bank if a customer transfers their low paying cash ISA which is already held there to a higher rate account.

By saying "no transfers", most of the new accounts opened will be "new money" and increase the savings book.

thenudeone

1) Because the bank can limit the cost of having to pay a competitive interest rate to attract the customer.

2) A customer is valuable because many will stay invested the account long after it's been closed to new customers and the interest rate has fallen to near zero (which it often does); and because they can be marketed other products.

3) people who transfer their ISAs rather than leave them where they started are generally more informed and more likely to leave once the rate drops, meaning less profit.

Vortigern

Where transfers are not accepted, the bank will get deposits up to the current year's allowance of £5760
Where transfers are accepted they could get deposits of 13 years allowances together with all the accrued interest. The small banks can't cope with these large deposits and the larger banks don't need the money anyway.