Save to buy ISA's

Starbrite

So, in March 2012 I opened a save to buy ISA. I was happy with the account. Paid 2.5% and interest was paid in September a toatl of £20,000 can be saved alone with the possibility of being able to obtain a nationwide 5% deposit mortgage.

Back in December 2015, Nationwide wrote to me to tell me the account was changing to a new save to buy ISA Issue 3. I was told the interest rate will be slashed to 2% making the account inline with the new government released products. I was at the time annoyed with the change alas I could not see a better paying account.

Fast forward to yesterday, I went to my local branch paid in £5 to find out what interest had been added to the balance. Slightly worried as I understand April 2015 to 27th Jan 2016 should be receiving 2.5% and Jan to April should be getting 2%. Not sure what the amounts for this will be as I find maths hard!

Anyway, yesterday after getting my passbook back of the cashier, I noticed the interest hadn't been added. The cashier lady had no idea why said nothing was showing on the system. I left my details and a lady from Nationwide called me to explain.

It turns out in one single line on a 5 paged letter the interest in now paid I quote "Interested is calculated daily and paid annually on the anniversary of account opening and on closure" This being 27th Jan when Nationwide closed my account and opened this new issue 3 ISA.

So through these 'minor' changes I am now annoyed with nationwide and wanting to move my money.

I see Barclays have a Save to buy ISA paying 2.27%
http://www.barclays.co.uk/helptobuyisa

The questions I have are:

Can I transfer my 10k + savings over?
Is this account better than the one I have? I know the interest is!
Slightly concerned over the possibility of missing out on the a 5% deposit mortgage through Nationwide...

To be honest I am confused do I keep money where it is or move it?

Sorry for the long post.

eskbanker

You may be confusing Save To Buy ISA with Help To Buy ISA - I believe that the former is a Nationwide standard cash ISA, whereas the latter is a generic government-sponsored scheme introduced in December 2015, with products offered by all the main players including the Barclays one you've highlighted.

You can't transfer significant sums into a Help To Buy ISA as they're subject to a monthly cap on contributions, see http://www.moneysavingexpert.com/savings/help-to-buy-ISA and https://www.helptobuy.gov.uk/help-to-buy-isa/faq/ for further details.

And Nationwide's shift to annual payment of interest won't have disadvantaged you in terms of interest paid or the rates concerned, as the quoted statement says, it's calculated daily. If you were to close your Nationwide account before the anniversary next month, you'd still get interest pro rata, i.e. about 11 months worth.

Starbrite

So you cannot transfer a Save to Buy ISA into a Help to Buy ISA... So my money is stuck?

eskbanker

No, you can transfer from Save To Buy into a different cash ISA but as per my previous post and links, there are contribution limits for the Help To Buy ISA scheme, which effectively mean that you can't pay more than £1,200 in in the first month and £200 per month thereafter, so it's unsuited for those with a lump sum.

Also, read carefully on both those linked pages for what to do if you've already paid into a cash ISA this tax year (as you have) but want to open a Help To Buy one before 6 April 2017.