Daughters Cash ISA

Sue58

My daughter's cash ISA with Yorkshire Bank is coming to the end of its 2 year period which was paying 2% interest. She has £25K in this account but doesn't want to tie this money up for long periods (1/3 years) but would like to transfer out of this ISA for a better interest rate.

Any suggestions on the best way to invest this £25K? She works abroad on cruise ships so does not have any direct debits.

xylophone

She could get DDs by opening a couple of Tesco savings accounts.

Three BOS Vantage would give her (3% dropping to 2%) on £15,000.

She might consider opening a Flexdirect current account with Nationwide - this would give her 5% for a year on £2,500 and she could also open the Flexclusive 5% monthly saver.

She might then consider opening a TSB Plus. current account.

If she doesn't fancy the faff - see

http://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

Neil_Jones

If you want to keep it in an ISA (your/her choice) you can transfer it to another provider and remember just because it says "5 year fix" or whatever doesn't mean it's locked away for five years.

You can get access to it whenever you want, typically for an early interest penalty which on a five year fix is typically a year's worth of interest, and another two year fix may be 120 days of interest.

However the interest rates are lower on the ISAs so a better option if you want to forgo it is as posted above.

alanq

Neil_Jones wrote: »

If you want to keep it in an ISA (your/her choice) you can transfer it to another provider and remember just because it says "5 year fix" or whatever doesn't mean it's locked away for five years.

You can get access to it whenever you want, typically for an early interest penalty which on a five year fix is typically a year's worth of interest, and another two year fix may be 120 days of interest.

It was also my understanding that it was a requirement that all ISA funds must be accessible albeit with a penalty for early access / closure.

However, YBS's Ts&Cs for fixed term ISAs say "Withdrawals are not permitted during the term other than circumstances covered under the Savings Pledge 2017 for account holder(s) or their immediate family members - critical or terminal illness, death, redundancy, nursing home or elderly care costs, divorce or court order. "

http://www.ybs.co.uk/savings/tax-free/fixed-rate-isa-12mth.html

PeacefulWaters

alanq wrote: »

It was also my understanding that it was a requirement that all ISA funds must be accessible albeit with a penalty for early access / closure.

However, YBS's Ts&Cs for fixed term ISAs say "Withdrawals are not permitted during the term other than circumstances covered under the Savings Pledge 2017 for account holder(s) or their immediate family members - critical or terminal illness, death, redundancy, nursing home or elderly care costs, divorce or court order. "

http://www.ybs.co.uk/savings/tax-free/fixed-rate-isa-12mth.html

" Closure is permitted during the term subject to an amount equivalent to 60 days’ loss of interest on the closing balance"

isasmurf

alanq wrote: »

It was also my understanding that it was a requirement that all ISA funds must be accessible albeit with a penalty for early access / closure.

That's correct. All ISAs must allow transfers and separately, at least, full withdrawal (there is no requirement to allow partial withdrawals). Failure to include these into the written T&C invalidates it as an ISA (pages 43 and 44 of HMRC's guidance notes).

Sue58

xylophone wrote: »

She could get DDs by opening a couple of Tesco savings accounts.

Three BOS Vantage would give her (3% dropping to 2%) on £15,000.

She might consider opening a Flexdirect current account with Nationwide - this would give her 5% for a year on £2,500 and she could also open the Flexclusive 5% monthly saver.

She might then consider opening a TSB Plus. current account.

If she doesn't fancy the faff - see

http://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

Yes, exactly 'if she doesn't fancy the faff'! She is moaning to me about the low interest rate for her ISA when this one expires shortly but wants me to look into better deals for her!

I think the options are either I open all these current accounts for her or she decides to accept the best cash ISA deal available over maybe 3-5 years and pay a penalty if she needs the money.

alanq

PeacefulWaters wrote: »

"Closure is permitted during the term subject to an amount equivalent to 60 days’ loss of interest on the closing balance"

I, it seems wrongly, interpreted that as saying if closure was allowed under special circumstances then the 60 day penalty would apply. Closure is a withdrawal is it not? I think that it would have been clearer if the Ts&Cs said "partial withdrawals" were only allowed under special circumstances.

There have been cases where people have signed up to fixed term (non-ISA) accounts who see that withdrawals are not allowed but assume that early closure is allowed and find out the hard way that they are wrong to do so.