Cash ISA transfer timing lost interest

elstevester

Hi
I changed my Cash ISA provider this year. Due to the time taken for the transfer, I have effectively lost ~2 weeks of interest with the new bank. I needed to open the account to initiate the transfer, but couldn't fund it until my existing provider completed the transfer. This effectively reduces the advertised interest rate. What should I have done? Is one of the banks at fault?
Thanks in advance for comments.
Steve

eskbanker

Cash ISA transfers should be effected such that the interest is earned without a gap, i.e. old provider pays up to a specific date and the new one pays from the next day.  You'll still earn interest at the correct daily rate from then on but if it's a one-year fixed term account then you may only receive, say, 50 weeks worth of interest if that's how long the money is actually in the account for, but that notional 'loss' isn't any fault of either provider (or of yours).

Alexland

I'm unclear if the issue is that the Steve earned a lower rate of interest for the 2 weeks after the fixed rate expired (in which case next time line up the transfer in advance with a provider that will accept a future transfer date to be specified on their form) or the issue was that the new provider would not allow a new contribution until the transfer of the old ISA had completed? Either way 2 weeks of interest on a Cash ISA isn't going to be very much money these days.

elstevester

Thanks for those answers. eskbanker  has it right. I was concerned about the notional loss. I had imagined the transfer to a new 1yr ISA would magically line up the start/end dates. I had been concerned that the ISA had to be funded within a certain number of days, so jumped in with the new account, but I guess that's if I was putting the money in myself. In this case, I'm not sure how I could have done the transfer and got the full 52 weeks. I guess it's a quirk of the process.