Move all money out of Cash ISA?

jsj25

Hi everyone,

I'm currently trying to get the various savings accounts I have built up over the years in order and would be grateful for some advice.

For the past few years, I have paid monthly into a Virgin Cash ISA which historically offered a decent rate. The rate is pretty poor these days (soon to be 0.25% - yikes), so naturally I am looking to get this money working harder for me. For clarity, in the 2020/21 tax year so far I have paid £2,200 into it.

I understand that interest rates on Cash ISAs generally are very bleak at the moment. However, I have a Defined Access Virgin Savings account with a current savings rate of 1.3%, which I'm aware is better than all Cash ISA offerings and even the Marcus Savings Account (which I also have). I'm wondering therefore if the best thing for me to do would be to make the most of that good interest rate and move all the money out of my ISA and into the DA savings account?

I understand that as I have already paid money into the ISA, this will count towards my annual ISA limit, which I'm fine with. Similarly, as I've already paid into that Cash ISA this year, I'm guessing that if a good Cash ISA did suddenly turn up this year, I wouldn't be able to open one outright but rather would have to transfer the Virgin ISA over. Again, I'm fine with that. Just wondering if there is anything else I might not have thought of, or any disadvantages to moving my money across?

Thanks in advance for your help.

jsj25

Sorry, I should have mentioned that the money in these accounts is intended to be used for a house deposit within the next 12 months - or at least it was before COVID-19 - so easy access accounts are all I'm looking at.

Shedman

The Virgin Cash ISAs are flexible ISAs are aren't they (ours are). So you could transfer all except say £5 out to your other Virgin Savings account and then, if at a later date, a better Cash ISA appears with a different provider (and there are still some around at the moment any way such as Paragon at 1%) you could transfer the money back into your Virgin ISA first (so long as this is done before end of current tax year) and then do a ISA transfer to the new provider.  That way you keep the ISA status on that money.

Zorillo

If it's short terms savings for a house deposit then the ISA wrapper isnt worth worrying about  in my opinion, just move it to the best rate you can. 

jsj25

Thanks, both, for your responses. @Shedman that's a fantastic point, I didn't even realise that my Virgin ISA was flexible, but I've checked and it is! That's made my decision a lot easier.

Thanks again for your help, guys.