Moving Cash ISA to Regular Savings?

hardy24

I've got some money in a HSBC cash isa paying a stupidly low interest rate (and due to get lower in January).

I'm thinking about withdrawing some of the money to open a Nationwide FlexDirect account, to get the 5% interest for 12 months.

Is there any downside to this plan?

[Deleted User]

hardy24 wrote: »

I've got some money in a HSBC cash isa paying a stupidly low interest rate (and due to get lower in January).

I'm thinking about withdrawing some of the money to open a Nationwide FlexDirect account, to get the 5% interest for 12 months.

Is there any downside to this plan?

You will lose the tax-free status of the money and can never recover it on the money withdrawn, (unless your ISA is flexible and you replace it in the same tax year.)

hardy24

I know I would be losing the current tax-free status of the money, however I figured that in a years time I could simply pay the money back into a cash ISA (once the rates have improved hopefully) to 'regain' tax free status and I was unlikely to lose anything as under normal circumstances i'm unlikely to ever use my full yearly limit of £15k.

Stubod

Assuming its less than next yrs allowance of £20k, and you don't have another £20k to put in anyway, you may as well cash them in and go for the best rate....

Vortigern

A better plan might be to transfer your ISA from HSBC to nationwide. Nationwide ISAs are flexible, so you can use the ISA to feed the regular saver, and still be able to top up/replenish the ISA before the new tax year.

Nationwide's ISA rates are as bad as any others, but they do offer the flexibility to remove and replace funds.

TheShape

hardy24 wrote: »

I've got some money in a HSBC cash isa paying a stupidly low interest rate (and due to get lower in January).

I'm thinking about withdrawing some of the money to open a Nationwide FlexDirect account, to get the 5% interest for 12 months.

Is there any downside to this plan?

How much money have you got in the ISA and how much, if any, in other savings?

Once you have the FlexDirect you can also put £500 p/m in the Flexclusive Regular Saver at 5% interest (VAR) for the year.

If you're getting a Nationwide Current Account be sure to get a friend/family member or someone on the MSE referrals board to recommend you because you'll also get a £100 referral bonus.

TheShape

Deleted_User wrote: »

You will lose the tax-free status of the money and can never recover it on the money withdrawn, (unless your ISA is flexible and you replace it in the same tax year.)

Vortigern wrote: »

A better plan might be to transfer your ISA from HSBC to nationwide. Nationwide ISAs are flexible, so you can use the ISA to feed the regular saver, and still be able to top up/replenish the ISA before the new tax year.

Nationwide's ISA rates are as bad as any others, but they do offer the flexibility to remove and replace funds.

I don't think these posts are clear re removing and replacing funds in an ISA.

A Flexible ISA would allow you to withdraw previous tax years money and replace it in the same tax year it was withdrawn without affecting your allowance for that tax year. It would also allow you to pay in new money, withdraw it and redeposit it without affecting the total amount of new deposits you can make.

A non-flexible ISA would allow you to withdraw money and you would still be able to deposit your £15,240 allowance into that ISA in the same tax year. You couldn't re-deposit withdrawn money if it took the total deposits for that year above the yearly deposit allowance.

Vortigern

TheShape wrote: »

I don't think these posts are clear re removing and replacing funds in an ISA.

I'm a man of few words. K.I.S.S. is my philosophy.

TheShape

Vortigern wrote: »

I'm a man of few words. K.I.S.S. is my philosophy.

Who you calling Stupid?:p

I'm just hoping my post was correct. A lot of people worry about withdrawing from an ISA when it is unlikely to be a problem paying in again later due to the small amounts often involved.

Vortigern

TheShape wrote: »

I'm just hoping my post was correct. A lot of people worry about withdrawing from an ISA when it is unlikely to be a problem paying in again later due to the small amounts often involved.

You post is correct. As is your assertion that people worry unnecessarily about ISA withdrawals etc.

I didn't call anybody stupid, did I? I said KISS is my philosophy.

... and of course it could mean Keep It Super Simple?

TheShape

Vortigern wrote: »

I didn't call anybody stupid, did I? I said KISS is my philosophy.

You didn't. I wasn't being serious, hence the . Perhaps a would have been appropriate.