Do ISAs *not* pay interest on transferred-in balances?

owen-b

Hi there,

Last financial year (2012-2013) I opened a Santander ISA rated the best for the first year interest rate by MSE, and transferred the balance of my existing ISAs with other suppliers over to it. I did not make any new payments into my ISA during this financial year as times were tight.

I was under the impression that the initial rate of interest Santander offered on the first year of this ISA applied to the total balance of the ISA, including any ISA transfers made into it, at the end of the financial year. Does anyone know if this is the case, or does interest only apply to new contributions?

The reason I ask is that we are now in a new financial year (2013-2014) and I don't see any interest applied to my ISA with Santander for 2012-2013.

I'm sure I only picked that one because MSE said it was the best for transfers, but they don't seem to have applied one single penny of interest on a five-figure balance - which was made up entirely of transfers.

Does it need to stay there a full year or something? I believe Santander only got it fully set-up with the transfers all in by the middle of May 2012. Am I going to have to wait until the middle of May this year to get my interest?

And if so, what are my options for making the most of that balance transferring it again? Are there any ISAs that will accept transfers in June 2013, and will pay some interest on them in April 2014, rather than making me wait a full year every time?

Anyone able to help me work it out? Cheers!

DragonQ

Of course, you get interest on all the money in the account, regardless of where it came from.

Santander's policy for this ISA might be annual interest on the anniversary of opening the account, which would explain why you haven't got any interest yet. If in doubt, just call them and ask when the interest will be deposited.

typistretired

They usually pay interest on the 1st May for some reason check the paperwork you received from them.

xylophone

The dates on which financial providers pay interest varies - if, for example, your provider pays annual interest on 1st August and you invest in an account on 1st April 2013, three months' worth of interest will be added to the capital on 1st August 2013 and then you will receive a year's worth of interest on that total on I August 2014.

Some account providers pay monthly interest.

It is a matter of checking the terms and conditions of the account you choose to see when interest is paid.

Interest in an account is also capitalised on closure- for example, suppose you had an instant access account with A but saw that B had a better rate - on transfer to B, interest earned on A would be added on closure whether on not the normal interest date had been reached.

But before any transfer, the precise terms and conditions of the account need to be checked- was it instant access? Was any bonus only paid at the end of a certain period of time? Were there penalties for closing the account before a certain fixed period? Etc.

innovate

It would help if you would state what the name of the ISA is, and when exactly the money was credited into your account.

There are documents on the Santander website that tell you precisely what terms apply to your ISA. Or may be you printed/saved those terms when you opened the account?

Any answers without knowing exactly what product we are talking about, and exactly when your money got credited, can only be speculative.