Fixed isa and cash isa

javixeneize

Hi

I have a situation that probably you have seen in the past, so I’m looking for advice

In 2018/2019, I had a cash isa, and I decided to convert it to a fixed rate Isa for 2019/2020. I can’t put any money there so my allowance remains as £20.000.

Can I open a new cash Isa and use my £20k allowance on that new Isa, or would it be a problem as I have already converted a cash Isa into a fixed Isa this year?

Thanks

capital0ne

How did you convert it - was it a transfer? If so you still have £20k ISA allowance.

If you withdrew from your cash ISA and paid it into the fixed rate ISA then no, you've used your ISA allowance.

javixeneize

Thanks. It’s a process called USA upgrade. I keep the same account number and everything but the product type changes. The system says I have 20k allowance, but I can’t use it on this product

Here is more info about the upgrade process

https://www.santander.co.uk/personal/savings-and-investments/isas/2-year-fixed-rate-isa/apply-for-2-year-fixed-rate-isa-upgrade
Thanks

Notepad_Phil

javixeneize wrote: »

Thanks. It’s a process called USA upgrade. I keep the same account number and everything but the product type changes. The system says I have 20k allowance, but I can’t use it on this product

I think you meant an ISA upgrade, in terms of upgrading I assume an already existing instant Cash ISA with Santander to their 2 year fixed Cash ISA and did not add any new money into it.

In which case yes you can open a new Cash ISA and feed it with your ISA allowance. This will be £20k assuming you have not put any money this tax-year into any of the other ISA variants i.e. Stocks & Shares ISA, Help To Buy ISA or Lifetime ISA.

When you do open the ISA might I recommend that you look at places other than just Santander. E.g. I don't know when you opened the Santander 2 year Cash ISA but the current rate (0.8% at max) is well below the current best 2 year rate.

Maybe take a look at https://www.moneysavingexpert.com/savings/best-cash-isa/ and even consider whether you need to put your cash savings into an ISA at all https://www.moneysavingexpert.com/savings/best-cash-isa/#tip1.

javixeneize

Thanks for clarifying. When I opened it the rate was much higher

I’m thinking on opening the cash Isa in paragon, that’s the highest rate offer at the moment, unless you have a better suggestion

Notepad_Phil

javixeneize wrote: »

Thanks for clarifying. When I opened it the rate was much higher

I’m thinking on opening the cash Isa in paragon, that’s the highest rate offer at the moment, unless you have a better suggestion

Not sure what type you're thinking of opening, is that instant-access or fixed for a number of years?

In either case I think you can probably find a better rate, even if you're sticking with an ISA - have a look at https://www.moneysavingexpert.com/savings/best-cash-isa/.

Personally for me any new cash being saved is put into non-ISA accounts as the interest is so much better e.g. take a look at https://www.moneysavingexpert.com/savings/.

javixeneize

That’s interesting. Yes, I’m planning opening a cash Isa, so it would work.

Another question. If I open a cash Isa but I don’t put any money on it, can I open a new one, or I can just open 1 per year?

eskbanker

javixeneize wrote: »

If I open a cash Isa but I don’t put any money on it, can I open a new one, or I can just open 1 per year?

You can open as many as you like but the rule is that you can only pay new money into one ISA of each type in any given tax year, where the four types are cash, S&S, innovative finance and Lifetime, i.e. even though you refer to "Fixed isa and cash isa" in your title, you're basically describing two cash ISAs.

At the risk of causing confusion, there is also the concept of split ISAs in place at a few providers (not Santander) who effectively bundle multiple cash ISAs together as if they were one ISA, as explained in the above MSE cash ISA article under "Can I split between a fixed and easy-access ISA (or regular saver ISA)?".