New to Cash ISAs questions

seriously

Hi all

I have some money to invest in Cash ISAs but there a few things I'm unsure. Would really appreciate any advice or answers!

Let's say I put £20k today into an Cash ISA at 3%, does this mature and stop at 2023 April or 2023 November? What happens then? Will this account continue to collect 3% into 2023-24 or does the interest rate change?

Regarding withdrawal penalties on Cash ISAs, does this apply if I transfer to another account (i.e with a better rate) in the same tax year?

Let's say I have now have a £20k ISA (22-23) that has matured from a past tax year. If I wish to transfer this to another account in 23-24, are there penalties? Does this £20k qualify for the new interest rates that I find in 23-24? 


Thanks!

refluxer

seriously said:

Let's say I put £20k today into an Cash ISA at 3%, does this mature and stop at 2023 April or 2023 November? What happens then? Will this account continue to collect 3% into 2023-24 or does the interest rate change?

If the ISA is an Easy Access Cash ISA, then it won't have a maturity date and will earn tax-free interest until you close it or transfer it elsewhere. The rate will be variable, so can change.

If the ISA is a Fixed Rate Cash ISA, then it'll earn tax-free interest at the rate stated on the account you apply for, for the duration of the fix. The rate won't change.

The only thing that resets on 6th April every year is your £20k ISA allowance.

seriously said:

Regarding withdrawal penalties on Cash ISAs, does this apply if I transfer to another account (i.e with a better rate) in the same tax year?

A withdrawal penalty will apply if you close or transfer a Fixed Rate Cash ISA before it's maturity date. The longer the duration of the fix, the higher the penalty. You can transfer Easy Access Cash ISAs without a penalty.

seriously said:

Let's say I have now have a £20k ISA (22-23) that has matured from a past tax year. If I wish to transfer this to another account in 23-24, are there penalties? Does this £20k qualify for the new interest rates that I find in 23-24? 

If a Fixed Rate Cash ISA has matured and is no longer within it's fixed rate period and you haven't submitted any maturity instructions, then it'll normally convert to a 'maturity' or Easy Access ISA, from where you can transfer or close it without a penalty.

seriously

refluxer said:

seriously said:

Let's say I put £20k today into an Cash ISA at 3%, does this mature and stop at 2023 April or 2023 November? What happens then? Will this account continue to collect 3% into 2023-24 or does the interest rate change?

If the ISA is an Easy Access Cash ISA, then it won't have a maturity date and will earn tax-free interest until you close it or transfer it elsewhere. The rate will be variable, so can change.

If the ISA is a Fixed Rate Cash ISA, then it'll earn tax-free interest at the rate stated on the account you apply for, for the duration of the fix. The rate won't change.

The only thing that resets on 6th April every year is your £20k ISA allowance.

seriously said:

Regarding withdrawal penalties on Cash ISAs, does this apply if I transfer to another account (i.e with a better rate) in the same tax year?

A withdrawal penalty will apply if you close or transfer a Fixed Rate Cash ISA before it's maturity date. The longer the duration of the fix, the higher the penalty. You can transfer Easy Access Cash ISAs without a penalty.

seriously said:

Let's say I have now have a £20k ISA (22-23) that has matured from a past tax year. If I wish to transfer this to another account in 23-24, are there penalties? Does this £20k qualify for the new interest rates that I find in 23-24? 

If a Fixed Rate Cash ISA has matured and is no longer within it's fixed rate period and you haven't submitted any maturity instructions, then it'll normally convert to a 'maturity' or Easy Access ISA, from where you can transfer or close it without a penalty.

First off, wow what a quick and concise reply! Thank you very much. Appreciate your response

So as I understand it:

1) If I put £20k into a 1 year fix cash isa today, it will mature in 12/11/23. Then come 06/04/23, I will be able to invest another £20k (for 23-24 tax year) into another ISA of my choice?

2) Come 12/11/23, my £20k allowance (of 22-23) will convert to a maturity or Easy Access ISA and then I will be able to transfer this to whatever the market offers then? Therefore am I correct in assuming the rate that we see today can apply to both transfers (for past years' allowances) AND the current year? Is there a limit e.g you have £100k from past years etc? 

For people who invest in fixed rate ISAs at different times of the year, every year, it must be quite a hassle to manage the transfers etc!

refluxer

seriously said:

So as I understand it:

1) If I put £20k into a 1 year fix cash isa today, it will mature in 12/11/23. Then come 06/04/23, I will be able to invest another £20k (for 23-24 tax year) into another ISA of my choice?

2) Come 12/11/23, my £20k allowance (of 22-23) will convert to a maturity or Easy Access ISA and then I will be able to transfer this to whatever the market offers then? Therefore am I correct in assuming the rate that we see today can apply to both transfers (for past years' allowances) AND the current year? Is there a limit e.g you have £100k from past years etc? 

For people who invest in fixed rate ISAs at different times of the year, every year, it must be quite a hassle to manage the transfers etc!

1) Yes

2) Yes and yes - current rates apply whether you're opening a new ISA with a cash deposit from the current tax year or transferring in an ISA from a previous tax year.

Limits will depend on the ISA provider but it obviously makes sense to stay under the £85k FSCS limit for any one 'financial institution'. I tend to keep my ISA allowances separate and take them out for different lengths of time and at different times during the tax year - this avoids any FSCS limit issues.

Albermarle

Firstly it would be a good idea to continue read through this forum from time to time, as it will improve your general knowledge about ISA's, and savings accounts in general. 

One statement by Refluxer is not quite correct.
If a Fixed Rate Cash ISA has matured and is no longer within it's fixed rate period and you haven't submitted any maturity instructions, then it'll normally convert to a 'maturity' or Easy Access ISA, from where you can transfer or close it without a penalty.
Some providers do this, but some will transfer you into the same product that is maturing. So for example if you had a two year fixed ISA, they would transfer you into a new two year fixed ISA, at the interest rate prevailing at the time.
The key point is that a few weeks before your ISA matures, the provider will contact you and ask what you want to do, and give you some options. You must respond to this, otherwise you might end up locked in a new product that you do not want,

sheilavw

hi

I have just over 7k in an Halifax isa, 0.25%. Can I transfer it online to another provider?

Thanks

eskbanker

sheilavw said:

I have just over 7k in an Halifax isa, 0.25%. Can I transfer it online to another provider?

Yes, if the new provider accepts transfers in - presumably an account with a rate that low won't be a fixed-term one?

sheilavw

thanks its an instant isa saver. I had made an appointment for December with the Halifax to change it but I think that there maybe some that pay more interest. I also have some savings in an Halifax saver reward I could put in. I need to be a bit more savvy and try and make a bit more interest!

Albermarle

Compare The Best UK Savings Accounts | moneyfacts.co.uk

seriously

refluxer said:

seriously said:

So as I understand it:

1) If I put £20k into a 1 year fix cash isa today, it will mature in 12/11/23. Then come 06/04/23, I will be able to invest another £20k (for 23-24 tax year) into another ISA of my choice?

2) Come 12/11/23, my £20k allowance (of 22-23) will convert to a maturity or Easy Access ISA and then I will be able to transfer this to whatever the market offers then? Therefore am I correct in assuming the rate that we see today can apply to both transfers (for past years' allowances) AND the current year? Is there a limit e.g you have £100k from past years etc? 

For people who invest in fixed rate ISAs at different times of the year, every year, it must be quite a hassle to manage the transfers etc!

1) Yes

2) Yes and yes - current rates apply whether you're opening a new ISA with a cash deposit from the current tax year or transferring in an ISA from a previous tax year.

Limits will depend on the ISA provider but it obviously makes sense to stay under the £85k FSCS limit for any one 'financial institution'. I tend to keep my ISA allowances separate and take them out for different lengths of time and at different times during the tax year - this avoids any FSCS limit issues.

Albermarle said:

Firstly it would be a good idea to continue read through this forum from time to time, as it will improve your general knowledge about ISA's, and savings accounts in general. 

One statement by Refluxer is not quite correct.
If a Fixed Rate Cash ISA has matured and is no longer within it's fixed rate period and you haven't submitted any maturity instructions, then it'll normally convert to a 'maturity' or Easy Access ISA, from where you can transfer or close it without a penalty.
Some providers do this, but some will transfer you into the same product that is maturing. So for example if you had a two year fixed ISA, they would transfer you into a new two year fixed ISA, at the interest rate prevailing at the time.
The key point is that a few weeks before your ISA matures, the provider will contact you and ask what you want to do, and give you some options. You must respond to this, otherwise you might end up locked in a new product that you do not want,

Thanks, got it!

Will keep the forum on tab now as I think I get the basics and will start investing. 

jimjames

sheilavw said:

thanks its an instant isa saver. I had made an appointment for December with the Halifax to change it but I think that there maybe some that pay more interest. I also have some savings in an Halifax saver reward I could put in. I need to be a bit more savvy and try and make a bit more interest!

You don't need to stick with your existing bank, in fact banks often pay the worst interest so much better to go elsewhere if you want to maximise your return.