Interest and isa rules.

Amyloupj

Hi, this is probably a stupid question and I think I know the answer but I just want to be sure. I just opened a new cash ISA and have paid into it. My previous isa is with Sainsbury’s and I have just realised they do not automatically change interest rate without you asking for them to do so. My question is that is it ok to get them to change isa rate on my old isa when I am now paying into a new one this year. I know you are not allowed to pay into two different cash isas in the same year but wasn’t sure if there is rules about the interest rate.

mebu60

Assuming your previous ISA is not in the current tax year you can transfer it to any provider that accepts transfers-in including to a better paying account with the existing provider. Just ensure that they do the transferring so that you do not lose the tax-efficient wrapper.

refluxer

Amyloupj said:

My previous isa is with Sainsbury’s and I have just realised they do not automatically change interest rate without you asking for them to do so. My question is that is it ok to get them to change isa rate on my old isa when I am now paying into a new one this year.

What type of ISA is the Sainsburys ISA ? 

If it's a fixed rate ISA that has matured, then it'll probably now be on a very low rate in which case you definitely need to transfer it to a new ISA to get a better rate.

If it's an older issue of their 'Variable Rate' (easy access) Cash ISA and it's paying less than the current issue (4.91% AER on £500+), then yes - it would be sensible to get them to upgrade/transfer you to the latest rate and the fact that you (presumably) haven't paid into it this tax year won't stop you from being able to do that.

The only thing you might come across (if you haven't paid into it for a while - eg. a year or more) is that it might need re-activating, which essentially just means signing another ISA declaration, AFAIK. This inactivity rule is being done away with from the next tax year onwards.  

Alterntively, you could transfer away to a new provider and get up to 5.11% (easy access), currently.

Amyloupj

Thanks for the advice. I’m happy to stay with Sainsbury’s. I was just worried that I wasn’t allowed to make changes to that account as I’m paying into a different cash isa this year, but since I’m not paying anything into the Sainsbury’s account this year then I presume it’s not breaking any rules getting them to up the rate.