To transfer, or not to transfer ...

Stephen_Leak

... that is the question.

I am in the process of MSE-ing my finances, and it is my ISA's turn.

It is a Halifax mini cash ISA, currently paying 5.75% and with a balance of £15,666. Unfortunately, they also have a transfer penalty of 180 days (approx. 6 months) interest. Based on last year's interest payment of £666, this is £333.

Therefore, would it be cost effective to transfer it to either the top pick Kent Reliance one at 6.21% (and is having to operate it by post a disincentive?), or either the Yorkshire or the new Bradford & Bingley internet e-ISAs at 6.05%?

I suppose it could be a case of short term pain for long term gain.

YorkshireBoy

The difference between HFX & YBS is £46 per year (£15,333 x 0.3%)

I suppose it could be a case of short term pain for long term gain.

How long have you got?

Milarky

Is this a fixed rate/fixed term ISA then? If so how much time is there on the clock?

Stephen_Leak

YorkshireBoy wrote: »

The difference between HFX & YBS is £46 per year (£15,333 x 0.3%) How long have you got?

Hopefully, I'll still be here in the 7 years, 2 months and 27 days it would take me to break even on these figures.

However, it looks like I will just have to wait for "no penalty transfers" to become the norm.

Stephen_Leak

Milarky wrote: »

Is this a fixed rate/fixed term ISA then? If so how much time is there on the clock?

I am still on the learning curve with ISAs, but I don't think it is.

Milarky

Stephen_Leak wrote: »

I am still on the learning curve with ISAs, but I don't think it is.

Important. Do you have one of these?

Halifax ISA Saver Direct

in which case this applies to transfers as well as withdrawals:

http://www.halifax.co.uk/savings/impinfo.asp#Withdrawal_information
General
You can usually withdraw up to the normal daily cash limit of £1,200 a day per account from any of our branches, or £600 a day per account from any of our agencies, or up to £250,000 by counter cheque, subject to account conditions. If you want to withdraw more than these amounts in cash or by cheque, just let your branch or agency know in advance.

In other words, if you have a 'ISA Saver Direct' as opposed to a 'Fixed Rate ISA Saver', there is no penalty for transfers out to the likes of YBS.

I think your confusion may arise because when you click go to the 'withdrawal information' (above) it is followed by a list of specific accounts - with specific terms - but only the 'Halifax ISA Saver' is mentioned. That links to this:

Halifax ISA Saver
Detailed conditions apply to Halifax ISA Saver accounts. These cover withdrawals and the amounts you can pay into an account under the Government's ISA rules. For full information please ask for a copy of our ISA brochure.

The minimum amount you can withdraw from a variable rate Halifax ISA Saver is £10.


Although it's best to leave a fixed rate Halifax ISA Saver open until the end of the fixed term, you can close your account or transfer out to another ISA Manager. However, you will lose an amount equal to 180 days' interest, calculated on the rate at which interest is paid on your account.

which is referring the 'Fixed Rate ISA Saver'. Only the 'General' conditions apply to the ISA Saver Direct however - and that means 'no restrictions/penalties'.

Call Halifax (on 01422 380880) to speak to someone about the ISA you have and to confirm if it is instant access and penalty free (as I suspect it is)

As an aside, you could move it to a 1 year fix with Halifax (6.2%) as easily as moving it to another provider but, from recent experience of doing this myself, I think the problem is really with Halifax processing any request in a timely fashion. For instance, I had intended to move my ISA to KR back in April/May and sent the paperwork off to them. They forwarded this in two days but three weeks on Halifax had done nothing to acknowledge/respond - so I withdrew the request and it never happened. Halifax have got a lot of customers and , probably like a lot of other ISA providers, like to 'guild' the whole process and slow it up unnecessarily - just because it is an ISA transfer they are being asked to deal with. I blame Gordon Brown for not seeing to it that ISA transfers were thought about properly when ISAs were first introduced. It was inevitable that more transfers would be needed as time passed (etc, etc)

Stephen_Leak

It is an "ISA Saver Direct" - both the old passbook and the online service show it as this. The FAQ's you have quoted were the ones I found.

Thanks for the advice about the Halifax 1 year fixed rate ISA - I presume that, at the end of the year you have the option to either leave it in for another year or transfer it elsewhere.

Is it a good idea to time-shift the ISA's year away from the change of the financial year, which must be the busiest time for ISA providers? Or is it best to keep to the financial year, which is when all the new ISA's seem to be launched?