What is the interest on matured ISA’s

Lofty1161

Hello, I have a question around matured ISA’s.  I understand that you can put £20,000 in an ISA each year and that you can transfer matured ISA’s into one place. Is it just the first £20,000 that earns the interest and / or does the matured ISA’s earn interest as well?

e.g.
2023 / 2024 £20,000 (matured)
2024 / 2025 £20,000 (new)

Transfer matured ISA 2023 / 2024 to 2024 / 2025 provider along with this years allowance giving a total of £40,000

eskbanker

The whole balance in any ISA will earn interest, like any other savings account.

Lofty1161

eskbanker said:

The whole balance in any ISA will earn interest, like any other savings account.

Great thanks, so it will be at the same rate as the new ISA say 5% for example on the whole £40,000?

eskbanker

Lofty1161 said:

eskbanker said:

The whole balance in any ISA will earn interest, like any other savings account.

Great thanks, so it will be at the same rate as the new ISA say 5% for example on the whole £40,000?

In the vast majority of cases, yes, although there is at least one ISA that pays differential rates for new money and transfers, Plum I think.

slinger2

Correct. 5% of £40,000 = £2,000 assuming it's a full year

refluxer

Lofty1161 said:

Hello, I have a question around matured ISA’s.  I understand that you can put £20,000 in an ISA each year and that you can transfer matured ISA’s into one place. Is it just the first £20,000 that earns the interest and / or does the matured ISA’s earn interest as well?

There are pros and cons to combining ISAs from different tax years - the main reason many people do this is for simplicity but it's important to bear in mind that the £85k FSCS limit makes it unwise to do this any more than three times at the most (if you're wanting to max out your £20k allowance and combine your ISAs over multiple tax years) and possibly less than this if you had other savings with the same financial institution, or were wanting to have the option of opening other types of account in the future and not go over the FSCS limit.
  
Keeping ISAs from different tax years separate takes a bit more managing, but can be helpful to smooth out the rise and fall of interest rates - if you take out fixed rate ISAs at different times of the year, for example. This is something that many people do intentionally and you'll often see it referred to as a 'savings ladder'-type of approach. Another advantage of doing this is that you have the option to access different chunks of your savings at different times of the year, as opposed to being forced to withdraw from one big (combined) fixed rate ISA if you found yourself needing some before maturity and paying a penalty. Holding less with any one financial institution also allows you to take advantage of other types of account they might be offering at decent rates.

jimjames

Lofty1161 said:

eskbanker said:

The whole balance in any ISA will earn interest, like any other savings account.

Great thanks, so it will be at the same rate as the new ISA say 5% for example on the whole £40,000?

No, in most cases if the ISA has matured you will get a tiny rate compared to new money. Each bank is different so you really need to check it out to make sure you're not losing out. If you transfer though you'll get the agreed rate on everything you transfer.