Cash ISA Near to FSCS Safety Limit

glumgawk

I have built up a single cash ISA over a number of years that is worth £84k. It is sitting in an account earning a pittance of interest. I am just about to open a new cash ISA for this year with the intention of funding it with £10k of new money. If I also transfer my existing existing ISA into this new account I am going to exceed the FSCS protection limit, which I am not particularly comfortable with. What is my best option, what do others do when they have built up a sizable ISA?

Band7

You can split your ISA into two or more 

glumgawk

Thanks for the reply, I didn't know that, I thought you could only fund a single ISA each year. Sorry I am not really up on the rules of ISA's

ForumUser7

glumgawk said:

Thanks for the reply, I didn't know that, I thought you could only fund a single ISA each year. Sorry I am not really up on the rules of ISA's

You are only able to add funds yourself to a single ISA each year.

What @band7 has suggested is called a partial transfer. This is something to ask the new ISA manager to arrange (if the old ISA manager says it is possible to do partial rather than full).

Do not attempt to remove the funds yourself and put them back in through standard withdrawals - the funds will lose their ISA status, and would then class as new funding.

https://www.moneysupermarket.com/savings/isa-transfers/

Please consult these webpages, as they are government sources:

https://www.gov.uk/individual-savings-accounts/withdrawing-your-money

https://www.gov.uk/individual-savings-accounts/transferring-your-isa

glumgawk

Thanks for the clarification and the information links which I will read.

eskbanker

glumgawk said:

I have built up a single cash ISA over a number of years that is worth £84k. It is sitting in an account earning a pittance of interest. I am just about to open a new cash ISA for this year with the intention of funding it with £10k of new money. If I also transfer my existing existing ISA into this new account I am going to exceed the FSCS protection limit, which I am not particularly comfortable with. What is my best option, what do others do when they have built up a sizable ISA?

Many would think twice about keeping more than £85K in cash deposit form, where it's pretty much guaranteed to lose real-terms value to inflation, but what's the money likely to be needed for and when?  If, for example, you're buying a house within the next few years then that would be a good reason to stay in cash, but money unlikely to be accessed in the short or medium term (or maybe even until retirement) can work much harder within better vehicles.

And of course these aren't mutually exclusive options, you could mix'n'match and save some and invest the rest....

xylophone

See

https://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

Band7

eskbanker said:

glumgawk said:

I have built up a single cash ISA over a number of years that is worth £84k. It is sitting in an account earning a pittance of interest. I am just about to open a new cash ISA for this year with the intention of funding it with £10k of new money. If I also transfer my existing existing ISA into this new account I am going to exceed the FSCS protection limit, which I am not particularly comfortable with. What is my best option, what do others do when they have built up a sizable ISA?

Many would think twice about keeping more than £85K in cash deposit form, where it's pretty much guaranteed to lose real-terms value to inflation, but what's the money likely to be needed for and when?  If, for example, you're buying a house within the next few years then that would be a good reason to stay in cash, but money unlikely to be accessed in the short or medium term (or maybe even until retirement) can work much harder within better vehicles.

And of course these aren't mutually exclusive options, you could mix'n'match and save some and invest the rest....

I can think of other reasons for keeping your money in cash - for instance, if you don’t expect to live for more than 10 years and would rather spend your money than leave it to a cattery etc. Investing isn’t always the desirable default it is often portrayed as

Albermarle

glumgawk said:

Thanks for the clarification and the information links which I will read.

Also regular reading of this forum will help keep you up to speed with ISA rules, and general savings guidance.

eskbanker

Band7 said:

eskbanker said:

glumgawk said:

I have built up a single cash ISA over a number of years that is worth £84k. It is sitting in an account earning a pittance of interest. I am just about to open a new cash ISA for this year with the intention of funding it with £10k of new money. If I also transfer my existing existing ISA into this new account I am going to exceed the FSCS protection limit, which I am not particularly comfortable with. What is my best option, what do others do when they have built up a sizable ISA?

Many would think twice about keeping more than £85K in cash deposit form, where it's pretty much guaranteed to lose real-terms value to inflation, but what's the money likely to be needed for and when?  If, for example, you're buying a house within the next few years then that would be a good reason to stay in cash, but money unlikely to be accessed in the short or medium term (or maybe even until retirement) can work much harder within better vehicles.

And of course these aren't mutually exclusive options, you could mix'n'match and save some and invest the rest....

I can think of other reasons for keeping your money in cash - for instance, if you don’t expect to live for more than 10 years and would rather spend your money than leave it to a cattery etc. Investing isn’t always the desirable default it is often portrayed as

Absolutely - I was just giving one example and certainly wasn't seeking to imply that investing is a desirable default, but just that it may be worth considering, in the context of the question "what do others do when they have built up a sizable ISA?".  You'll have seen numerous threads on here where people convince themselves that cash is 'risk-free' and that investing is 'risky', which is an over-simplified perspective, so it seems worth highlighting that better decisions can be made if more informed....

Scot_39

As someone who had money in the Icelandic banks when failed - I then stuck to the FSCS limits rigidly.

I had money in both, FSCS paid out within weeks - it targets 7 days, limit 10 for normal amounts.

When the second one was shutdown by UK watchdog before start of business on Monday, the Icelandic parents boss had given a live interview that weekend all was fine.

I had requested to move money final balance out, the shutdown froze all BACs transfers dead - so it left and never arrived in destination- a worrying few days followed.  BACs in the end recredited it in some way, and fscs paid it out, but a nervous few days. 

So another vote for partial transfer here to split.