closing ISA and opening a new one

wheelz

I have an ISA with Nationwide that I haven't paid into this year. The rate is very low as its original good bonus rate has run out. Nationwide have a new ISA that I qualify for Flexclusive. I have about 8000 in my ISA. Do I just close my account, open the new ISA and pay the max in? Is it as simple as that? What do I do with the remaining money and is it worth it overall?

AlwaysLearnin

If you really must have a Nationwide ISA then it's an option I guess, but you could find an ISA account that accepts transfers in and maintain this years allowance too.

wheelz

I have no accounts with another bank, everything with Nationwide, mortgage etc., have had some in the past, but it seems a hassle with new passwords etc. I always forgot as I hardly used them. When you transfer your ISA do you generally do this online or do you go to an physical bank? It's all really easy if it's all on your one single banking website. But maybe I should look into it.

Biggles

What you definitely don't do is close your ISA and withdraw the funds, you will lose the tax-free status on that money and only be able to contribute this year's maximum to the new account.

To retain the tax-free status on your £8,000, you need to find an ISA provider who will accept a transfer-in of your old ISA; some don't.

I'm sure, if you find the right account for you, you will be able to complete the process online.

psychic_teabag

Might be worth opening the flex ISA with the minimum just to establish the account and bag the rate while it's available.

Looks like Nationwide have a Web ISA #4 at 1.5% - you could get in touch with them and ask them to redesignate your existing ISA as one of these. I've not done this with Nationwide, but Santander and Halifax offer this facility, so you get the benefit of the new rate, without the form-filling of a formal transfer. This will preserve the ISA status of the money. You may as well do this while deciding what else to do - can still transfer it to another provider later.

If you don't anticipate using your full ISA allowance this year, there's nothing wrong with withdrawing some money from the old ISA and depositing as new money into the new ISA.

wheelz

The rate I'm looking at is 2.25% so quite good (flexclusive). I can't tranfer it. I thought I wasn't allowed to open a second cash isa with nationwide for some reason. But maybe I am as I haven't paid into it this year. That seems like a good idea. Although the old ISA has a ridiculous low rate, might be better to put it in a normal savings account. I'll send a message to Natiowide about opening the second one, see what they say.

Archi_Bald

Of course you can open another ISA at Nationwide, and particularly so because you have not made any contributions this financial year.

But you are right, the 2.25% NW ISA won't allow transfers-in, so you are still left with the issue that you get terrible interest on your existing ISA. You should look to have that transferred (by a new provider) to a better ISA. Check the stickies for best rates.

psychic_teabag

Nationwide are one of the few providers that allow the current year's subscriptions to be split across several of their accounts. So even if you had already subscribed to a Nationwide ISA this year, you could still open and subscribe to another. (Not relevant in this, though.)

wheelz

Archi_Bald wrote: »

But you are right, the 2.25% NW ISA won't allow transfers-in, so you are still left with the issue that you get terrible interest on your existing ISA. You should look to have that transferred (by a new provider) to a better ISA. Check the stickies for best rates.

Thanks. So I open the new one, move my max allowance (5700) into the new ISA and then look where to transfer the remaining 3000? That seems simple enough.

alastair_h

wheelz wrote: »

Thanks. So I open the new one, move my max allowance (5700) into the new ISA and then look where to transfer the remaining 3000? That seems simple enough.

From what you've said, I'd use 2013/14's allowance (£5760) with the 2.25% - which doesn't allow transfers in (for "New Money" only). You can't split it up like you think above - that is still transferring in basically.

Then transfer your £8K to the best available account which suits your needs, see attached link for best buys https://forums.moneysavingexpert.com/discussion/401374

wheelz

I would of course move it into my current account first before I move it into the new ISA. I think that's possible, I spoke to them they were a bit surprised that I asked it but the answer was yes (although I was not so convinced of the knowledge).