Opening a new Cash ISA

Terry_conquest

I already have two cash ISA's 1 with virgin and one with the YBS they mature in April 2025. I understand that I can have multiple ISA's provided I do not invest over the £20,000 so no problem there. Where I am a little in the dark is. lets say Fred's bank is offering an ISA at a better rate than my current providers and this offer comes out in January 2025, is the rate of that ISA likely to remain the same into April? So what I would be looking to do is open a new ISA in Fred's bank using savings from premium bonds or regular savings account, then transfer the other two ISA so that all my Cash ISA investment money earns Fred's rate. If the ISA is launched in January, I can't invest a penny into it until April without going over the allowance but if I hold on until April is the rate likely to change. I know this sounds a bit dim but I'm relatively new to ISA's.

Thank you in advance for taking the time to read this and any answers you may be kind enough to provide. 

masonic

ICA?

Providers will have summary information on their website about their ISAs, which will include whether they can change the rate and how much notice they will give. Given that the base rate is extremely likely to go down, I'd expect most existing easy access accounts to be paying less in April than they are now.

ISAs that are not credited with any money (either new money or a transfer in) are not considered opened by HMRC. The provider may close the account if you don't fund it.

PixelPound

Individual Cash Account 

refluxer

Terry_conquest said:

I already have two cash ISA's 1 with virgin and one with the YBS they mature in April 2025. I understand that I can have multiple ISA's provided I do not invest over the £20,000 so no problem there. Where I am a little in the dark is. lets say Fred's bank is offering an ICA at a better rate than my current providers and this offer comes out in January 2025, is the rate of that ICA likely to remain the same into April? So what I would be looking to do is open a new ICA in Fred's bank using savings from premium bonds or regular savings account, then transfer the other two ICA so that all my Cash ICA investment money earns Fred's rate. If the ISA is launched in January, I can't invest a penny into it until April without going over the allowance but if I hold on until April is the rate likely to change. 

Have you used up this tax year's ISA allowance yet ? If you have and your current fixed rate cash ISAs don't mature until April 2025, then you won't be able open a new cash ISA in January and fund it in time to avoid it getting closed, as most ISA providers will only give you a month at the most to do this. That's presuming that you wouldn't want to transfer one of your existing ISAs before maturity of course, as you'd have to pay a fairly hefty penalty to do this.

If you haven't used all of the current tax year's allowance, then yes - you can open and fund a new ISA in January but the only way to ensure that the rate remains the same is to take out a fixed rate ISA and their limited funding window means that you wouldn't be able to transfer in your maturing fixed rate ISAs in April. There are a few ISA providers who do allow ongoing new subscriptions for the duration of the fix so you could pay in up to £20k from your 2025-26 allowance and so-on (Barclays and Kent Reliance spring to mind) but I think they still restrict transfers-in to the first month.

One provider who does seem to allow further transfers-in to their fixed rate cash ISAs throughout the fixed rate period is Shawbrook - their T&Cs state that 'Transfer requests received after your initial account application may be refused' but, anecdotally on here at least, they have been known to allow this. This may change if interest rates continue to drop though and too many people attempt to transfer in large amounts to existing ISAs at much higher rates than those currently available for new accounts.

FWIW, fixed cash ISA rates are slightly lower now than they were back in April this year so if the base rates drops as predicted in the next few months, then any fixed rates on offer next January are likely to be lower than the ones you currently have (and therefore transferring before maturity wouldn't make sense).