My cash ISA interest rate has dropped after one month

stevebrizzle

Hi all,

I'm fairly new to ISAs so wonder if anyone could answer a question I have. I opened a new cash ISA with Darlington Building Society one month ago, which at the time had a pretty generous rate of interest at 1.7%. However, I have noticed today that the rate has dropped to 1.3%. Does this mean that I am only earning 1.3% now as well? If so, I wasn't expecting the rate to drop so quickly. I know Martin Lewis advises to ditch and switch if the interest rate drops but if this is going to happen on a monthly basis, I could be potentially opening up 12 different ISAs a year. Is this usual, or have I just been unlucky that DBS's rate has dropped so quickly?

Thanks
Steve

Archi_Bald

The rate on this ISA seems variable, so it is possible that it dropped.

If you find a better interest rate for an instant access ISA elsewhere which allows transfers in, you can ask the new provider to transfer your ISA. Do not attempt to transfer the money yourself. However, the difference in how much interest you might be able to get elsewhere is probably negligable since all rates are pretty bad now.

You are not allowed to open more than one ISA a financial year.

stevebrizzle

Hi Archi, thanks for your reply.

I understand that I am not allowed to open more than one ISA per year, but presumably if I do what you say and instruct a new provider to transfer my ISA funds, I can do this unlimited times per year as there will only ever be one ISA open at any one time. Could you just confirm I'm right in thinking this please.

Thanks
Steve

le_loup

Your thinking is entirely correct. As many times as you like.
However, if you don't like variable rate accounts, you can always switch to a fixed rate, fixed tem account.

J_i_m

Whether you can hold or open multiple ISAs during a year, I'm not so sure. I think there's noting stopping your from doing so.

But you can only subscribe to one. To pay into multiple ISAs risks you losing your tax free saving allowance.