Difference between cash and e-cash ISA

BoyJohn811

I have been looking into opening a new cash ISA and I have come across the term 'e-cash ISA'. The rates between cash and e-cash ISAs can be substantial (e.g. 3.4% versus 5.25%). Upon some research, I found that e-cash ISAs can only be opened with new money (that is, not via ISA transfer). Would someone know whether this information is correct? Also, what happens with an e-cash ISA once new money has been deposited into it? Does it become a regular cash ISA that I can transfer easily to another provider? Any other differences?

Thank you very much.

refluxer

AFAIK, an 'e-ISA' is just a cash ISA that you can open and manage online (with online presumably being the only option) as opposed to in-branch or by post. Some banks offer higher rates on these ISAs as they'll require less man-power on their side to manage them.

It's rare for an ISA provider not to allow transfers-in from other ISAs - which provider are you thinking of ?

Marcus, Saga and Zopa are the only ISA providers listed in the current MSE top ISA tables who don't allow transfers in, for example. Marcus and Saga never have and Zopa have only recently introduced their current ISA range so are probably just wanting to minimise any hassle, initially.

BoyJohn811

Thanks for the quick reply. I might be misguided then in terms of the meaning of the e-ISA. I would be opening and managing it online anyway, so no problem. I was thinking of Castle Trust (5.25% for 1 year fixed deposit) as I already have another fixed ISA account with them from last year. It would save me the trouble opening accounts at yet another provider.

refluxer

So taking Castle Trust as an example, it looks like I was right - their 'e-Cash ISAs' can only be opened online whereas their 'Cash ISAs' can be opened online or by phone or post.

Both accepts transfers-in, by the looks of it.

With another potential 0.50% interest rate rise being talked about for the next BoE meeting at the start of August, I'm holding off on ISA fixes at the moment.

Bigwheels1111

I just opened an isa with virgin money, 3 years at 5.20%.
They raised their rate to 5.50%. 11 days later.
As I was in their 14 day cooling off period, I went into the account and clicked on new savings 
Then isa, and the new 3 year isa at 5.50%, clicked 3 boxes, one is use old isa to fund.

2 minutes in total and new isa was set up.
At day 13 I could switch to the 2 year and then back again if rates rise at the end of the month.
They add any interest to the account when you change.
So win win.

Matt17

Bigwheels1111 said:

I just opened an isa with virgin money, 3 years at 5.20%.
They raised their rate to 5.50%. 11 days later.
As I was in their 14 day cooling off period, I went into the account and clicked on new savings 
Then isa, and the new 3 year isa at 5.50%, clicked 3 boxes, one is use old isa to fund.

2 minutes in total and new isa was set up.
At day 13 I could switch to the 2 year and then back again if rates rise at the end of the month.
They add any interest to the account when you change.
So win win.

@Bigwheels1111 this sounds like a good plan. Am I understanding correctly that every 13 days you can switch from one virgin isa to another with just a few clicks without penalty and you could do this indefinitely until rates start to fall and you get the interest for the 13 days added each time you switch? 

Harry227

Sorry if this is a bit off topic and elementary, but can anyone explain the advantages/disadvantages of opting for interest paid either monthly or annually? Thanks for your forbearance !

refluxer

Harry227 said:

Sorry if this is a bit off topic and elementary, but can anyone explain the advantages/disadvantages of opting for interest paid either monthly or annually? Thanks for your forbearance !

If the quoted AER is the same for annual or monthly interest (which it usually is), then the end result (the amount of interest you'll have received after a year) will be pretty-much identical.

With a normal (non-ISA) account, choosing between monthly or annual interest is often done for tax purposes (eg. monthly interest if you want to spread the interest out over different tax years or annually if you want to purposely push it into the next tax year) but this isn't as relevant in an ISA, with the interest being tax-free.

Getting interest paid away monthly from an ISA can be a good option for anyone who wants the interest as regular income, although the obvious downside to doing this with an ISA is that the amount you shield from tax doesn't grow over time like it would if you retain the interest within the ISA.

When the option is available, I tend to choose monthly interest on my ISAs because it's nice to see the balance grow

Bigwheels1111

Matt17 said:

Bigwheels1111 said:

I just opened an isa with virgin money, 3 years at 5.20%.
They raised their rate to 5.50%. 11 days later.
As I was in their 14 day cooling off period, I went into the account and clicked on new savings 
Then isa, and the new 3 year isa at 5.50%, clicked 3 boxes, one is use old isa to fund.

2 minutes in total and new isa was set up.
At day 13 I could switch to the 2 year and then back again if rates rise at the end of the month.
They add any interest to the account when you change.
So win win.

@Bigwheels1111 this sounds like a good plan. Am I understanding correctly that every 13 days you can switch from one virgin isa to another with just a few clicks without penalty and you could do this indefinitely until rates start to fall and you get the interest for the 13 days added each time you switch? 

Thats what I plan to do.

I opened up a virgin 3y isa at 5.2% on the 28/06/23.

On the 10/07/23 I think it was they offered 5.5%.

I logged in, went to my account.

Scrolled down below my isa and clicked on new savings .

The clicked on the new 5.5% 3y isa.

There were 3 or 4 boxes to tick.

A drop down box is for funding with the old ISA.

Then next and account was setup and interest from first account was added £11 ish.

The next day the account had the new 5.5% rate.

Matt17

Thanks Bigwheels just opened a 3 year and it's now 5.55% and plan to switch again in 13 days unless rates have dropped