Transferring 2 Cash ISA's into a new Cash ISA Account

Fatboydel888

Hi,

I currently have 2 Virgin Cash ISA Accounts 1 Year fixed Interest Accounts, created either side of the 1st April 2024 Tax Window. One matures on the 24th Feb and the other on the 24th May. 

Two questions, firstly will I need to transfer the accounts to a new Cash ISA when they mature or can I just leave them running?

If I do need to transfer them to a new account I will need to open a new Cash ISA for the Feb account at maturity, and transfer the current value into it. Can I do that for the May account at the same time, to merge them into one account, or will I need to wait for the May one to mature first? If I can do both at the same time will I lose interest on the later account?

refluxer

The first thing you need to do is read the T&Cs for your existing fixed rate accounts to find out what happens to them at maturity - most will default to a 'maturity'/easy access account if you don't submit maturity instructions but some will be automatically transferred into another fixed rate account of the same duration, so you need to know where you stand. 

In terms of what to do next, you have a few options. If you're set on merging the two ISAs, then you could transfer the February ISA into an easy access account (or simply let it automatically mature into one if that is the default option) and wait until the second one matures in May to combine them. (Doing anything with the May ISA before it matures would invoke an interest penalty, which you would probably want to avoid). The downside to doing this is that if interest rates fall between now and May, the fixed rate you end up with in May will almost certainly end up lower than if you'd opened a fix in February.

Personally, if you're wanting to continue with fixed rate accounts, I would open a new fix for the ISA that matures in February and a second fix for the one that matures in May and not worry about combining them. The benefits of keeping ISAs from different tax years separate (rather than combining them) outweigh the downsides, IMO.

If you are keen to combine them though, then there is another option and that is to open a new fixed rate ISA in February (for your Feb ISA) that allows continued contributions and transfers throughout the duration of the fixed rate period, as this would allow you to transfer in your May ISA when it matures. There aren't many banks who do this though, but Shawbrook are one of them. They do state that on their T&Cs that transfer-in requests must be received at the time of application and that they retain the right to refuse future transfer-in requests but, anecdotally on here at least, they do seem to allow it. They also allow you to contribute further new subscriptions so you could open a fix in February for your Feb ISA and then also pay in your 2025-26 allowance after 6th April, for example, which could be handy if interest rates fall.

Fatboydel888

OK, thanks for your help, will look into it.