Transfer of ISA

mollieddee

Hello I hope someone can answer my query and I hope i'm not too confusing. I have an ISA that has just matured with Virgin Money and it is sitting in their low interest E Access ISA Issue 2 account whilst I decide what to do with it. What I want help with is the amount is above the FSCS by about £50k not counting this years £20k allowance. Am I better to open a new ISA with this years allowance then can I transfer over a set amount (the £50k) which would leave £85k with VM which I will move into a higher interest/fixed rate account and £70k ish with the new provider or put this years allowance in with VM then split it (£85k/£50k) again leaving £85k with VM and the excess into the new account. I really hope this makes sense. Thank you in advance

eskbanker

I can't think of any benefit in putting this year's money in the 'overfilled' VM one, so would suggest the first option makes more sense.

badger09

A small point, but if you have £85k in any of these accounts, the interest credited would take you over £85k so not covered by FSCS. Depending on interest rate, don’t have more than say £80k in a 1 year fix (less if you’re fixing for longer). 

Another point: do you need that much in cash savings? Have you thought about investing? How’s your pension?

mollieddee

Hello and thank you both for your comments. To answer your comment badger09 I do have over £85k in the VM account hence why I said that I am going to split the amount over two accounts but was looking for the best way to do it. Eskbanker your comment makes sense so thank you. 

eskbanker

mollieddee said:

To answer your comment badger09 I do have over £85k in the VM account hence why I said that I am going to split the amount over two accounts but was looking for the best way to do it.

I believe that @badger09 was referring to your stated intention to leave £85K with VM, whereas it's more prudent to leave headroom for interest, so £80K in VM and £55K elsewhere would be safer than:

mollieddee said:

...split it (£85k/£50k) again leaving £85k with VM and the excess into the new account...

mollieddee

Thank you eskbanker. I see what you both mean now. Sorry if I've come across a bit snippy. I really don't mean to. Im looking at it as leaving £85k in VM probably a fixed one year so at the end the interest will again be transferred out to whatever account I transfer the excess £70k to.  I hope this makes sense and thank you both again for your knowledge and help 

eskbanker

mollieddee said:

Im looking at it as leaving £85k in VM probably a fixed one year so at the end the interest will again be transferred out to whatever account I transfer the excess £70k to.  I hope this makes sense

At the risk of labouring the point, it isn't about what you do with the interest after it's paid but how much had been accrued at the time of failure.

If you had £80K in an account and would receive another £4K in interest at the end of the year, then if the bank failed inconveniently close to the end of the year, FSCS would reimburse both capital and accrued interest, i.e. nearly £84K.

If you had £85K in the account, none of that accrued interest would be reimbursed....

mollieddee

I see what you mean now thank you