Banks automatically transferring to another fixed term ISA after expiry

serenaecobb04

Hi there, I put my savings into a 1-year fixed ISA. However, after the year was up, the bank automatically put it into another 1 year fixed ISA at 1.37% (a lot lower than the interest rate on the original ISA) and they wouldn't let me take the money out as it was fixed. Is this allowed? Thanks, Serena 

masonic

All ISAs must have a cooling off period of at least 14 days where you can transfer out without penalty. They should also notify you ahead of maturity, so in practice you get even longer to opt out of the maturity account.

Neil49

serenaecobb04 said:

Hi there, I put my savings into a 1-year fixed ISA. However, after the year was up, the bank automatically put it into another 1 year fixed ISA at 1.37% (a lot lower than the interest rate on the original ISA) and they wouldn't let me take the money out as it was fixed. Is this allowed? Thanks, Serena 

It all depends on the terms and conditions set out with the original ISA.

You should read these to see what they say but I'm guessing that they will have informed you that the original fixed term was coming to maturity and gave you options of what to do next - the default being that if you did nothing then it would be rolled over into a further fixed term ISA.


Who is it with? 

serenaecobb04

Thank you, so if I hadnt contacted in that 14 days, they are allowed to automatically put my money into another fixed-term ISA?

masonic

serenaecobb04 said:

Thank you, so if I hadnt contacted in that 14 days, they are allowed to automatically put my money into another fixed-term ISA?

The 14 days starts when they put the money into another fixed term ISA, not before. So if your ISA matured less than 14 days ago, you should be able to transfer out penalty free. If you don't contact them within the first 14 days of the new fix being opened, then you'd be treated as accepting the new account and would need to pay any penalty required in order to transfer out.

Albermarle

Savings providers will contact you around 3 to 4 weeks before maturity of a fixed ISA, listing out your options.
One option is to do nothing, and the account will rollover into a new fixed term or into an easy access account ( depending on the provider)
If they did not contact you ( usually they do more than once) before the fixed term ended then you can object, but if they did contact you and you ignored it, then....

The new one year ISA at 1.37% is an abysmal rate, who is it ?

Ayr_Rage

On every occasion I have had fixed term savings, including cash ISAs, the provider has always advised of the maturity options well before the fixed term ended and more than once if I dithered.

You must have either missed or ignored the communication and the default option was to rollover into another fixed term.

Once that happened you would certainly have received a letter or email detailing your new product. 

If you have missed the cooling off period as well then you are stuck unless you can prove you were not correctly informed.

GrubbyGirl_2

If you have missed the cooling off period at least you'll only lose 90 days of 1.37% so still much better off transferring out

refluxer

I'm also curious to know who the providers is ? Of the 53 one year cash ISAs listed on Moneyfacts, the AA are the lowest at 2.90%.

masonic

GrubbyGirl_2 said:

If you have missed the cooling off period at least you'll only lose 90 days of 1.37% so still much better off transferring out

I don't think the ISA in question or penalty has been mentioned, but very likely it will be relatively small given the derisory rate.

Ocelot

90 days is quite common for a 1 year fixed rate. If so, the penalty will only be (90/365)*1.37 ie 0.337%