Transferring a Cash ISA 14 July 2022 at 4:05PM in ISAs & tax-free savings 8 replies 301 views

dogfonos

Yet another question regarding a Cash ISA transfer I'm afraid...

Would appreciate a clarification of the Cash ISA rules. I have a 5 year fixed term Cash ISA that matures next month. Very soon, I expect the provider to inform me what they intend to do with my 'matured' money but, from the provider website's FAQ's, it looks likely they will open an 'easy access' Cash ISA and transfer my money into that. However, for various reasons, I would prefer all this money to be moved to another provider's Cash ISA sometime during this tax year. I currently don't have any other Cash ISA accounts but could easily open one.

During this current tax year, I have not opened any new ISA accounts nor have I made any contributions to any ISAs either.

My question is: If the provider of the soon-to-mature fixed term Cash ISA opens an 'easy access' Cash ISA and transfers the matured sum into it, does this prevent me from opening a new Cash ISA account with another provider and transferring all money from the original provider's 'easy access' Cash ISA into it? If I opened a new Cash ISA account online with a provider of my choice, I may have to make an initial (minimal) deposit before I transferred the sum from the original providers 'easy access' Cash ISA - would that affect anything? And I do wish to keep this element of my savings under the ISA umbrella. Thanks.

Albermarle

My question is: If the provider of the soon-to-mature fixed term Cash ISA opens an 'easy access' Cash ISA and transfers the matured sum into it, does this prevent me from opening a new Cash ISA account with another provider and transferring all money from the original provider's 'easy access' Cash ISA into it? NoIf I opened a new Cash ISA account online with a provider of my choice, I may have to make an initial (minimal) deposit before I transferred the sum from the original providers 'easy access' Cash ISA - would that affect anything? It would mean that you could not contribute new money to any other Cash ISA in this tax year. It would not affect your desired transfer from your current cash ISA. And I do wish to keep this element of my savings under the ISA umbrella. Thanks.

refluxer

dogfonos said:

If I opened a new Cash ISA account online with a provider of my choice, I may have to make an initial (minimal) deposit before I transferred the sum from the original providers 'easy access' Cash ISA - would that affect anything?

If a Cash ISA provider accepts ISA transfers in and it's just a simple transfer you want, then you won't need to make an additional cash deposit. You can usually arrange the ISA transfer as part of the application process (in fact some providers insist on this) and if you do that, then you don't have to worry about the funding window (normally 2-4 weeks) as that normally only applies to new cash deposits.

If you want to keep your options open and also keep things simple (as far as new subscriptions are concerned), then it would actually make sense not to contribute any new money from the current tax year to the newly opened ISA you mentioned. This would then allow you to open a different ISA at some point during this tax year and pay your new contributions into that. Rates are increasing steadily at the moment and further BoE rate rises are expected this year, so fixed rates are likely to continue to increase if the first half of this year is anything to go by.

dogfonos

Thanks for your responses. The situation is much clearer now. When the time comes, I'll do a transfer only and not put any new money into the new Cash ISA so it leaves me the flexibility to open another Cash ISA later in the tax year if I so wish. Thanks again.

GrubbyGirl_2

dogfonos said:

Thanks for your responses. The situation is much clearer now. When the time comes, I'll do a transfer only and not put any new money into the new Cash ISA so it leaves me the flexibility to open another Cash ISA later in the tax year if I so wish. Thanks again.

If it's not far away you can start the process now and select to transfer when the old isa matures

refluxer

Just be absolutely sure that your current ISA provider will pay the money into an Easy Access 'Maturity' ISA and not into a new ISA with the same term as the old one (5 years in your case) - this is rare in my experience but has been known to happen and would most-likely be highly undesirable at the moment, with the way rates are rising. You need to read the T&Cs of the specific 5 year ISA you took out carefully and not the T&Cs of any current products, as it's possible they may have changed.

Also pay attention to the Maturity ISA interest rate, as these are usually poor and well below the same provider's normal (non-Maturity) Easy Access ISA account. If you don't intend to do anything with the Maturity ISA for a few months or more (eg. you're holding out for a certain fixed rate), you might want to consider transferring to either the same provider's normal Easy Access account (for ease) or that of a different provider, as it's likely you'll get a much better rate. I know from experience it's easy for time to slip away while you're mulling it over !

ScarletBea

@dogfonos, I just did something like that.
My Leeds BS ISA matures on the 1st and I was looking at replacements. I decided on the Nationwide 1 year 2%, and during the application process to open the NW account they ask how I want to fund, I say transfer from other ISA provider, then you put in the sort code and account of the maturing ISA and you can choose to only start the transfer when the other account matures, rather than today. You can do this process in advance, in the NW case, 15 days before the other account matures.
This way is easier than letting the other ISA maturing, moving to the easy saver, then moving from there into new account (which we can't do ourselves anyway or lose the ISA status).

refluxer

ScarletBea said:

I decided on the Nationwide 1 year 2%

That's not far off the bottom the MSE's Top One-Year Fixed ISA table so it's good to see Nationwide being almost (gulp)... competitive, which they haven't been for most of their accounts for quite a while. 

ScarletBea

Yes, I don't want app-only banks, and the faff of opening an account on a new bank (I **always** have to send ID....) isn't worth a couple of fraction percentage points...