Have I broken the ISA golden rule by transferring out ?

steve.baxter

Following researching on this site as to what to do now that my 2 Santander ISA's had reverted back to basic standard ones paying a measly 0.5-1.0%, I used my online account management to transfer the full amounts to my 123 current account on which I get 3%.


Further research then showed up the golden rule of never transferring out of your ISAs !! I take it that this is because although the rate is better at the moment, I will only ever be able to transfer up to my yearly limit back again, should things change?


Have a made a major mistake here & if so, surely Santander's account management should have flagged up some sort of warning, or can I just transfer the amounts back again as I still effectively have the 2 ISA accounts?

Tigsteroonie

You haven't transferred from your ISAs (that would be moving the money from one ISA into another ISA). You have withdrawn the money from the ISAs and paid it into a different kind of account.

If you wished to put the money back into an ISA (if you found one with a decent rate of interest), you would only be able to invest up to the maximum amount for this year.

As for a warning, did you do this online and, if so, did Santander not give a warning popup? That surprises me - I withdrew £250 from my NatWest ISA a couple of days ago, and I had to click OK on a screen warning me about effect of the withdrawal as opposed to transfer.

kidmugsy

steve.baxter wrote: »

Following researching on this site as to what to do now that my 2 Santander ISA's had reverted back to basic standard ones paying a measly 0.5-1.0%, I used my online account management to transfer the full amounts to my 123 current account on which I get 3%.

That's probably a pretty sensible decision. We've done something similar. If you change your mind then remember that from 01/07/2014 your annual NISA allowance is £15k.

Consumerist

steve.baxter wrote: »

Following researching on this site as to what to do now that my 2 Santander ISA's had reverted back to basic standard ones paying a measly 0.5-1.0%, I used my online account management to transfer the full amounts to my 123 current account on which I get 3%.

Now that you have accidentally withdrawn from the ISAs, you might as well capitalise on the mistake by getting the best rate possible.

TSB Plus current account is offering 5% AER on up to £2,000 and you may be able to open two of these; £500 per month deposits required.

Lloyds latest offering is the Club Lloyds current account offering up to 4% AER on credit balances up to £5,000 (2 x DDs + £1,500 monthly deposits required) and gives access to a 4% AER regular saver for £25 - £400 per month.

For a little extra work you can easily outstrip ISA rates, even allowing for the tax paid on interest outside an ISA.