ISA transfer/contribution confusion

Bossworld

I've had a Natwest e-Isa (now Cash ISA) for the last 10 or so years. The interest rate has dropped to 0.5%, so I wanted to move it to Halifax (where my current account now also resides).

However, I made one withdrawal of £200, and one deposit of £200, late in April 2015 (therefore in this current tax year).

I've

1) Opened the new Halifax ISA
2) Completed the Halifax transfer-in form.

As far as I can see, at this point I'm still fine with the 'one isa per year rule'. However, I'm absolutely baffled by what happens if I want to put more money into an ISA in this tax year.

I would like to close the Natwest ISA, and deposit circa. £5000 in August, into the Halifax ISA.

Can I do this? Or do I need to make this deposit into the NatWest ISA?

Thank you in advance.

jimjames

That's fine. You can deposit to Halifax once the transfer has taken place.

For those sorts of amounts you can do far better than ISAs if you're prepared to put a little effort in.

Lungboy

Did you not automatically close the Natwest ISA when you transferred the balance to Halifax?

badger09

Lungboy wrote: »

Did you not automatically close the Natwest ISA when you transferred the balance to Halifax?

The Natwest ISA will be closed, by Natwest, on transfer.

Bossworld

Lungboy wrote: »

Did you not automatically close the Natwest ISA when you transferred the balance to Halifax?

I've only set the process in motion today, the lady from Halifax only support wasn't sure what NatWest's process would be (NatWest closed my old current account when I switched to Halifax).

@ Lungboy - Halifax appear to offer a 4% Junior ISA if you hold an ISA with them - I'm wanting to put £20 a month away for the bairn until she's 18 so this seemed to make sense. I've only got £3k in my current NatWest ISA so I don't qualify for the better rates at the (admittedly few) deals I quickly looked at. I've opted for the 1 year fixed ISA at 1.3%.

jimjames

On the issue of kid's savings if you are putting money aside for 18 years then cash is unlikely to be the best option. Investing should give a better return over that timescale.

Bossworld

4% interest doesn't seem too shabby in the current climate though?

Appreciate there'll be peaks and troughs in the FTSE 100 but I'd rather not risk an almost guaranteed £2000 increase (assuming £20 per month, 4% interest, over 17 years).

Archi_Bald

The 4% AER is variable (they recently dropped it from 6% AER). But assuming you will get 4% all the while, the interest should be £1,729.89 according to http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#calculatorhttp://www.moneysavingexpert.com/savings/best-regular-savings-accounts#calculator. That is in today's money, not adjusted for inflation.

There are articles all over the internet about equities consistently outperforming cash. One worth reading: http://www.telegraph.co.uk/finance/personalfinance/investing/isas/10704998/Isa-decision-time-Cash-Isa-vs-investment-Isa.html but a bit of googling finds many others.

BTW, the FTSE 100 would not be the best choice for an investment as it is quite a narrow selection. It has been outperformed by the FTSE 250, for instance, and there are many other, better, options.