transfering part isa from fixed account

randm

i really need this explained VERY simply:) i moved my old isas to the virgin fixed 1yr account at 1.5% a few weeks ago and also added in an amount for this yrs isa.
i have gone over the fsc protected limit. DUH. i was told from virgin that i would get a 60 days interest penalty on the money i took out.
say for example i moved £10'000 to another isa provider, can someone please explain how this would work. that £10'000 would only have been in there a few weeks so would not have actually made much interest??/
thank you.

badger09

randm wrote: »

i really need this explained VERY simply:) i moved my old isas to the virgin fixed 1yr account at 1.5% a few weeks ago and also added in an amount for this yrs isa.
i have gone over the fsc protected limit. DUH. i was told from virgin that i would get a 60 days interest penalty on the money i took out.
say for example i moved £10'000 to another isa provider, can someone please explain how this would work. that £10'000 would only have been in there a few weeks so would not have actually made much interest??/
thank you.

On your figures, the interest penalty will be

10000 x 1.5% = 150 x 60/365 = £24.66 (assuming it is for exactly 1 year)

Even if your £10k has only earned say £8 up to now, you will still have to pay the higher penalty.

You should also check though, that Virgin will allow you to transfer the £10k out.

Alexland

You cannot split a current year Cash ISA between multiple providers. Virgin may consider the transfer as part of the same ISA you have made contributions into and if so you will not be able to split it until April.

Personally I wouldn't be too concerned about being over the limit for 1 year but it's relative to your appetite for risk and how significant the potential loss would be to your standard of living.

Alex.

eskbanker

Alexland wrote: »

You cannot split a current year Cash ISA between multiple providers. Virgin may consider the transfer as part of the same ISA you have made contributions into and if so you will not be able to split it until April.

That's not the case - the rule is that current year's contributions have to be in one place, but there's nothing stopping OP from transferring one or more previous year's contributions back out again to another provider without paying any new money in, thereby keeping all of this year's contributions with Virgin.

Alexland

I guess it depends if Virgin have a process to let you transfer a previous years contribution out of your current year ISA.

badger09

Alexland wrote: »

I guess it depends if Virgin have a process to let you transfer a previous years contribution out of your current year ISA.

As I said in post 2;)

randm

okay, brilliant, so they work out the interest if i had left that money in for the yr, but nothing gets took off the remaining amount.
makes sense so thank you!!!!
you can transfer part of an old isa but not a new yrs isa, with that it has to be the complete amount. i did double check with virgin that it would be allowed.
:beer:

randm

Alexland wrote: »

You cannot split a current year Cash ISA between multiple providers. Virgin may consider the transfer as part of the same ISA you have made contributions into and if so you will not be able to split it until April.

Personally I wouldn't be too concerned about being over the limit for 1 year but it's relative to your appetite for risk and how significant the potential loss would be to your standard of living.

Alex.

though just thinking about it, the isa would be transferred into another isa and i would be making interest on it there, so any money paid in penalties for leaving would be made up for in the new account???

Alexland

Well yes you would get interest in the new account but would need to be a higher interest rate than the Virgin account to match both the backwards and forwards interest that you would not get from Virgin.

Out of interest is there any particular reason you are holding so much cash? With inflation running around 3% your money is loosing 1.5% spending power every year. Is any of it long term savings in which case have you considered investments?

Alex

randm

Alexland wrote: »

Well yes you would get interest in the new account but would need to be a higher interest rate than the Virgin account to match both the backwards and forwards interest that you would not get from Virgin.

Out of interest is there any particular reason you are holding so much cash? With inflation running around 3% your money is loosing 1.5% spending power every year. Is any of it long term savings in which case have you considered investments?

Alex

tbh don't know much about investing, it was going to be for buy to let, but house prices are still fluctuating, though also have shares in vodafone.

badger09

randm wrote: »

tbh don't know much about investing, it was going to be for buy to let, but house prices are still fluctuating, though also have shares in vodafone.

BTL is now less attractive than it was, due to various tax changes. It can also be a complete PITA. Holding shares in a single company is considered very risky.

Have a read around this website. Good introduction to investing for beginners.

http://monevator.com/category/investing/passive-investing-investing/