Moving cash ISA to a better provider/rate

hogweed

Sorry if I'm asking really stupid questions which have been asked before (I have looked, but either couldn't find or couldn’t understand the answer). Last tax year, I took out a Barclay’s fixed one-year cash ISA, offering 4% I think.

To say the process was painful was an understatement – couldn’t apply online, couldn’t get them on the phone, had to take a bus into the city and make an appointment, then wait several weeks for it. This staff seemed like zombies – they didn’t advise me that I’d have to bring a bank statement with me so sent me out to find a branch of my own bank to get a statement printed off, in the middle of the appointment. It took half the day – it was like going back to the 1960s.

I have a single piece of paper confirming that I have an ISA with them, and giving the sort code and account number.

I saw recently that Lloyds were offering nearly 5% on what seems to be an identical product, and it seemed that I could simply transfer my ISA to them without penalty etc, so I applied to do this.

However, I've now received a letter from Barclays saying that they’re unable to “validate the transfer information”, so can't proceed.

It’s impossible to speak to them on the phone (our phones are all busy, please call back another time), and you can’t do anything online unless you have a bank account with them as well), so I spent half the day trying to talk to Lloyds. This has turned out to be equally impossible (our phones are all busy, please call back another time).

I installed Lloyds’ app, and chatted online with great difficulty (loooong waits for unhelpful answers); but all she really did was refer me to the phone service, which is always unavailable.

I've asked if they can just cancel the whole thing, but I’ve no idea if anybody’s really there or not, or cares.

But I’m now wondering if I’ve misunderstood the basis transferring last year’s ISA anyway – I had believed that doing this would (a) incur no penalties; (b) leave me with a 2022/2023 cash ISA with the new provider, with the same time left to run as Barclays – am I being naïve/stupid here?

If I’m right, I see Coventry BS now offers an even better rate… maybe they like dealing with customers, unlike the other pair.

If I’m wrong, I’ll just forget the whole thing, lesson learnt!

Thanks

 

 

lohr500

On what date did you fund the 1 year fix with Barclays last year? This is the start point. 

If it is more than 12 months ago, you should be able to transfer your Barclays cash ISA to any other provider who accepts transfers in on previous years money.

The choice on what type of cash ISA to transfer your Barclays cash ISA into is yours. Easy access, 12 month fixed, or longer fix.

If your ISA with Barclays was funded less than 12 months ago then more than likely there will be an exit cost based on so many days interest. Typically 90 days on a 12 month fix. 

hogweed

Thanks, haven't got the paperwork on me now, but it was in February this year. That's where I think I've maybe been naive - for some reason I thought that transferring an ISA didn't count as a withdrawal

Zuzi

What are the terms of your Barclays ISA, are you meant to leave it for one year? (I have learned that fixed can mean different things, fixed term vs fixed rate)

You may be in a similar situation to me, although I want to move a Santander ISA to Lloyds. That one is also fixed, for one year, so I will have to pay penalty, 120 days worth of interest, to transfer it out (because it doesn't "mature" until November).

I opened an ISA with Lloyds and you can request a transfer in online, Santander was the only bank that I want to transfer from that was on their list, so I completed the request online. First time I was doing a transfer, some questions didn't feel too well explained but I did my best...

Now I have heard that the request was rejected, and the Lloyds advisor explained that there should have been an option to say I want an "immediate transfer, regardless of any penalties". I don't remember there being an option exactly like that but next time I try, I will watch out for it. So, just guessing, your rejection could be due to the same...

Lastly, there have been reports that Lloyds will increase their ISA rates next week, by 0.5 percent. I will be closing the newly opened one (since it's empty and the transfer is not happening) and wait until that happens to open a new one.

hogweed

Zuzi said:

What are the terms of your Barclays ISA, are you meant to leave it for one year? (I have learned that fixed can mean different things, fixed term vs fixed rate)

You may be in a similar situation to me, although I want to move a Santander ISA to Lloyds. That one is also fixed, for one year, so I will have to pay penalty, 120 days worth of interest, to transfer it out (because it doesn't "mature" until November).

I opened an ISA with Lloyds and you can request a transfer in online, Santander was the only bank that I want to transfer from that was on their list, so I completed the request online. First time I was doing a transfer, some questions didn't feel too well explained but I did my best...

Now I have heard that the request was rejected, and the Lloyds advisor explained that there should have been an option to say I want an "immediate transfer, regardless of any penalties". I don't remember there being an option exactly like that but next time I try, I will watch out for it. So, just guessing, your rejection could be due to the same...

Lastly, there have been reports that Lloyds will increase their ISA rates next week, by 0.5 percent. I will be closing the newly opened one (since it's empty and the transfer is not happening) and wait until that happens to open a new one.

Yes I believe I was meant to elave the money in for a year, although 3 withdrawals were allowed, or something. But I think I made a fundamental error in my research, believing that transfers were in some way exempt from penalties for this sort of thing.

badger09

hogweed said:

Zuzi said:

What are the terms of your Barclays ISA, are you meant to leave it for one year? (I have learned that fixed can mean different things, fixed term vs fixed rate)

You may be in a similar situation to me, although I want to move a Santander ISA to Lloyds. That one is also fixed, for one year, so I will have to pay penalty, 120 days worth of interest, to transfer it out (because it doesn't "mature" until November).

I opened an ISA with Lloyds and you can request a transfer in online, Santander was the only bank that I want to transfer from that was on their list, so I completed the request online. First time I was doing a transfer, some questions didn't feel too well explained but I did my best...

Now I have heard that the request was rejected, and the Lloyds advisor explained that there should have been an option to say I want an "immediate transfer, regardless of any penalties". I don't remember there being an option exactly like that but next time I try, I will watch out for it. So, just guessing, your rejection could be due to the same...

Lastly, there have been reports that Lloyds will increase their ISA rates next week, by 0.5 percent. I will be closing the newly opened one (since it's empty and the transfer is not happening) and wait until that happens to open a new one.

Yes I believe I was meant to elave the money in for a year, although 3 withdrawals were allowed, or something. But I think I made a fundamental error in my research, believing that transfers were in some way exempt from penalties for this sort of thing.

It sounds like your Barclays ISA is a fixed rate/fixed term product, albeit one allowing penalty free withdrawals. Basically that means you could take money out of the ISA wrapper to spend or save in a different non ISA account.  

However, in return for that higher fixed interest rate, you’re expected to leave your ISA with Barclays for the full term. If you want to move it to another ISA  provider you’ll pay a penalty to Barclays. 

I would just sit tight for now as it appears your transfer request was rejected by Barclays so will stay with them until maturity unless you start the transfer process again. 

When you complete the transfer request with new provider there will be a box asking you to confirm you want to transfer straight away & suffer any penalty. 

hogweed

Thanks everybody - looks like I misunderstood the fundamentals due to something I read (can't even remember where).

I'll leave it where it is

Albermarle

I think you have got the details of the savings account ( one year fixed) mixed up with ISA transfer rules.

For example if it was an easy access cash ISA opened and contributed to in the last tax year, then you can arrange a transfer of that at any time to a new ISA provider.

By having a Fixed term/fixed rate account, you are obviously more restricted.

refluxer

As mentioned above, there is almost-always a penalty to pay when transferring or withdrawing from a fixed-rate ISA before the maturity date. Barclays just have the (fairly unusual) exception that they'll allow you to withdraw 10% of the balance three times during the fixed rate period, but this has to be as cash - they don't allow partial transfers out.

If rates are rising then it can sometimes be worth transferring a fixed rate ISA early and paying a penalty, but you obviously need to do your sums properly first. This calculator can help...

https://www.moneysavingexpert.com/savings/isa-switch-calc/

Despite rising rates, transferring early isn't always a no-brainer though. As an example - if you have 7 months left to run on a Barclays ISA containing £20k @ 4% and were considering a transfer to the current highest-paying 1 year fixed rate ISA (Virgin @ 5.30%) today, then you would end up £49 worse off after paying a 90 day penalty (according to the MSE calculator) so a transfer wouldn't be worth it.

For reference, the break-even figure today (based on the presumption that there are 7 months remaining) is around 5.72% but that figure will change over time (the closer you get to the maturity date, the higher that figure needs to be) so you need to reassess (and use the latest figures in the online calculator) as and when you're considering a transfer.

justforlaugh

Thanks for all your messages above. After using the calculator, I can see that I will be potentially £300 better off with moving an fixed rate ISA with Virgin money (now 4.1% to the new 5.4%). However, I already opened an 2023/24 cash ISA account with another provider.  Am I allowed to just make the full amount ISA transfer to virgin money? 

art123_2

I'm finding all of the ISA rules incredibly confusing, and looking for some help please

I have a 1 year ISA maturing in September 2024 and also a 2 year ISA maturing in November 2024, and I want to transfer them both into the same place when they mature.   I would also like to put up to £20000 in as well for 24/25 tax year.  Is this allowable, can you transfer both maturing ISAs in the same year, along with new money?

Also, I only want to transfer the capital from the 2 maturing ISAs, and not the interest.  Am I allowed to do this?

My first ISA matures on 30 September, so what is the best way to play this.  I understand it takes around 15 days to complete a transfer,  so am I best to open the new ISA first around 15 September by completing the ISA transfer request, and pay in new money at the same time, assuming it's ok to do that, or should I do it the other way round, by opening the new ISA with my maturing funds first, and then adding new money, or does it not matter.

My second ISA matures on 8 November, so once again, I take it I would need to get in touch around 15 days before maturity to arrange this transfer.

Any advice would be much appreciated

Thank you in advance