Correct Procedure for transferring Maturing Cash Isa's

art123_2

I am hoping that someone who has experience of transferring a Cash Isa's can confirm that I am following this procedure correctly.

I have 2 Fixed Rate Cash Isa's which are about to mature on 30/10/24(Santander) and 4/11(Newcastle B/S), and the government website states that it should take NO LONGER than 15 working days for funds to be transferred across.  

So, I am planning to open a new 1 year fixed rate Isa on 9th October, transfer new money in immediately for 24/25, and then complete the first ISA transfer request form at the same time, requesting the funds to be transferred over at the maturity date of 30/10.  I then plan to follow the Same procedure on Monday 14th October for my other maturing Isa on 4/11.

Having given 15 working days notice, am I correct in assuming that both of the funds should be transferred across to my new provider on the actual maturity date mentioned, and then show up in my new ISA account on the same day?  I am transferring a lot of money here, so I don't want to lose any interest.  If there was a delay in the transfer beyond the 15 days, can I claim back loss of interest for this period and who would be responsible for this, my old or new ISA provider.

refluxer

While it's possible to request a transfer of a fixed rate ISA ahead of it's maturity date, I think the 15 days allowed for the transfer to take place will only start once the receiving bank actually kicks off the transfer process and there's no way of knowing when this will be. 

Requesting such a transfer in advance can often proceed smoothly (on the maturity date as planned, given enough notice), however it's worth bearing in mind that problems can occur with ISA transfers and there have been forum posts where funds have been stuck in temporary 'maturity' ISA accounts (earning little to no interest) if the transfer doesn't take place on the requested maturity date.

The 15-day transfer guideline dates back to the days when banks carried out all ISA transfers via forms and cheques through the post. Nowadays, if both providers use the BACs ISA transfer process (see the list on this page), then there are no paper forms and funds are sent electronically, meaning that this type of transfer can take as little as 1-2 days. Both providers need to use the scheme though - if either one doesn't, then the transfer will involve the post and take longer. 

With all that in mind, my personal, preferred approach is to request that my fixed rate ISAs mature into easy access accounts and then I request any subsequent transfers from there. Provided the easy access rate is decent and both providers do electronic transfers, subsequent transfers are usually quick and loss of interest (when compared to a fix to fix direct transfer if fixed rates are higher) is minimal. 

masonic

A transfer application that is for a future date is pended until that date. The transfer then begins and should be completed within 15 working days of the specified date. However, some providers will reject transfer requests not made within (for example) 5 working days of maturity, possibly because they don't have systems in place to deal with pending transfers. As refluxer suggests, some providers also have problems when an account matures during the transfer process and the account number changes.

Many providers will backdate interest. It is considered best practice to do so.

art123_2

Many thanks to you both for your advice. 

Refluxer, I think that I will probably go down the route that you suggest, but just to confirm that I fully understand this.  If I give my isa providers instructions to roll over the funds at maturity to an easy access isa, then these funds should appear in my new account the following day.  Is it at that point I should complete the ISA transfer form with my new provider, quoting my new easy access isa account number on the form.  If that is correct, and both providers do electronic transfers, how long would you normally expect the transfer to take. 

refluxer

art123_2 said:

Refluxer, I think that I will probably go down the route that you suggest, but just to confirm that I fully understand this.  If I give my isa providers instructions to roll over the funds at maturity to an easy access isa, then these funds should appear in my new account the following day.  Is it at that point I should complete the ISA transfer form with my new provider, quoting my new easy access isa account number on the form.  If that is correct, and both providers do electronic transfers, how long would you normally expect the transfer to take. 

If you want to do it that way, you first need to check that your current fixed rate provider also offers an easy access (or 'maturity') cash ISA option as not all providers do. As far as I can see, both Santander and Newcastle BS do offer easy access cash ISA accounts, so all should be good on that front at least.

The next thing you need to check is the T&Cs for each of your accounts, to determine their maturity options and see whether you actually need to submit instructions. If you don't submit any, some providers may default to a 'maturity'/easy access account which can be a convenient, temporary option (although some pay a lower rate of interest than standard easy access) but some may roll your funds over into another fixed rate ISA of the same duration, the latter of which you would certainly want to avoid.

If you want a good case study for what you're about to do, I didn't submit maturity instructions for a Santander fixed rate ISA that matured at the end of last year as it defaulted to what they call an 'ISA Saver' (easy access) account. It was on a fairly low rate but I think the rate was the same as their standard easy access ISA rate, so there was no benefit to arranging an internal transfer (via maturity instructions) in my case. IIRC, when one of their fixed rate ISAs defaults to an ISA Saver, the account number remains the same. I didn't open a new fixed rate ISA straight away as I was holding off due to rising rates at the time but when I did open one with a building society a few weeks later, I submitted transfer instructions at the same time as account opening (on a Friday) and money arrived in the new ISA on the Tuesday, so it took 2 working days in total (electronic ISA transfers still involve human input and not all providers do that type of work at weekends).  YMMV though of course and there are never any guarantees when it comes to ISA transfers because you're at the mercy of both providers and their respective efficiencies ! I've never held an ISA with the Newcastle BS, so can't comment on how they operate. Make sure you choose your new ISA provider from the BACs ISA transfer list I linked to above to ensure the transfer is as quick as possible.

In terms of when to open your new fixed rate account, you would need to check how long they allow for ISA transfer requests to be received and work backwards from your maturity dates (but I wouldn't cut it too fine). In my experience, some ISA providers can allow up to a month for this but, at the opposite end of the scale, there are some who insist on transfer requests being submitted at the time of account opening, in which case you'd need to hold off until the maturity of your first existing ISA and there's a chance that transferring in your second ISA may not be possible if that has not yet matured. TBH though, it's not a good idea to combine ISA contributions from too many tax years into one place anyway IMO, as you'll only need to split them further down the line if and when you start to approach the FSCS limit..

art123_2

Thank you for your very detailed explanation of what my options are.  I am trying to get my head around this before I decide exactly what I am going to do.  I never realised that Isa's were so incredibly complicated.  Thanks again for your help.