Fixed Rate Cash Isa

Kregor

Hi,
I opened a 2year fixed rate cash ISA early in April this year with Virgin at a rate of 1.51% which was pretty good then. It was financed by a transfer in of funds from previous tax years ISA and I have not paid in anything into the fixed rate apart from this. Now that interest rates are much better is it possible close this account and to open a different ISA this year and transfer these funds in? Or is that not allowed within the ISA rules (as I have opened this one) and I need to wait until next tax year? There is a small penalty to pay for closing the account. I do not want to lose out on the cash isa staus of the savings as it exceeds the £20k yearly limit. Any advice would be gratefully accepted.

refluxer

Transfers don't count towards your annual ISA allowance, so you are free to transfer as often as you like.

Just bear in mind the penalties imposed by transferring early from any fixed rate accounts - they can be as high as 180 days for a 2 year fixed rate ISA so it's theoretically possible to get back less than you've paid in if you transfer out early, although you may still benefit from a new, much-higher rate in the long run.

As you presumably did last time, you'll need to open the new ISA first and request a transfer via the new provider's official transfer process - don't close the old one yourself or you'll lose the ISA status of your money.

savit4l8er

Yes, you can transfer it to a different ISA with Virgin or elsewhere.  You open the new one first and inform them you want to transfer the old one over. In the case of Virgin, they ask you if you want to move an existing account into the new one, I think that will include ISA's but if not, just open which one suits and send them a message requesting they move your money into the new ISA. It will still count as previous funds and you should be able to see you have £20k left to subscribe this year at the top of the page.  They have some good rates just now.

Many are doing it within the cooling off period but as you say, you will have the penalty. 

Have a look at this anyway, it might help with the process and give you an idea of how Virgin are operating just now. 

https://forums.moneysavingexpert.com/discussion/6378812/virgin-2-5-isa/p1

Albermarle

Kregor said:

Hi,
I opened a 2year fixed rate cash ISA early in April this year with Virgin at a rate of 1.51% which was pretty good then. It was financed by a transfer in of funds from previous tax years ISA and I have not paid in anything into the fixed rate apart from this. Now that interest rates are much better is it possible close this account and to open a different ISA this year and transfer these funds in? Or is that not allowed within the ISA rules (as I have opened this one) and I need to wait until next tax year? There is a small penalty to pay for closing the account. I do not want to lose out on the cash isa staus of the savings as it exceeds the £20k yearly limit. Any advice would be gratefully accepted.

There are numerous posts on the forum on exactly the same subject. So some time reading through it could be informative.

Ocelot

Make sure you transfer out, do not close it, or you'll lose your tax free status.

Kregor

Thank you all for clearing up my query. Given the recent increase in BOE interest rate I will wait a couple of weeks before I act.