Advise on moving ISA's

hewittinspain

I have had a yearly ISA with Lloyds which started off at £20,000 two years ago which did accumulate around £98 a month in interest at 5.5%. In September last year I automatically renewed it but the rate had dropped to 4.5% but because I now had £26,000 in the ISA the interest still worked out the same per month.

My ISA is due to run out again in two months and Lloyds have offered me 3.7% which is pretty poor but I do have £30,000 in this ISA so if I let it renew with them it will accumulate £92 a month based on 30k

If I do not want to renew with Lloyds and I go with someone like Plum which are paying 4.7% then am I right in saying I can only invest £20,000 again giving me a monthly interest of £78 and then I'd have to invest the other £10,000 somewhere else?

The reason why I've stayed with Lloyds is because I've just let the ISA roll over and accumulate giving me more monthly interest.

Ayr_Rage

If it is "old" funds from previous tax years plus reinvested interest you can transfer all of it to a another ISA provider and can add up to £20,000 of "new" money per tax year.

There was no need to stay with Lloyds, just keep moving to the best rate, taking into account that some of the newer providers don't give the same rate for transfers in as compared to new subscriptions.

Never take funds out to move them, initiate an ISA transfer with the new provider!

grumpy_codger

Forget about the monthly interest. You can add £20K every year - full stop. The interest doesn't count.

And, AFAIK, it's 4.98% AER at Plum (and at Trading 212 where their ISA is flexible - see MSE article Best cash ISAs ).

ETA: Also, AFAIK, you can transfer your ISA to T212 and get 4.98% on the total balance*. Plum is notorious for giving their top rate only on 'new' money and just 3.29% on transferred.

*ETA: I was wrong. MSE article says 

both [Plum and T212] pay lower rates if you transfer in from an existing ISA.

So, it's worth getting it for the new £20K and transfer the existing ISA to some other provider offering better rate on transfers:

https://moneyfactscompare.co.uk/isa/1-year-fixed-rate-isas/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

https://moneyfactscompare.co.uk/isa/easy-access-cash-isas/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

kempiejon

Generally each year you can have a new ISA, usually existing amounts can be collected by a new ISA provider.
Good explainer here https://www.moneysavingexpert.com/savings/best-cash-isa/#what

clairec666

Interest rates have dropped over the last couple of years, so that's why Lloyds are offering you a much lower rate than you previously have. It'll be the same for other banks. That being said, you can still do a bit better than 3.7% if you shop around.

You can transfer all of your existing ISA to a new one with another provider, AND add up to £20000 of new money in this tax year. Don't worry about interest earned, that doesn't affect the £20000 limit.

Don't transfer your £30000 to Plum because they offer a lower interest rate for transfers in, and I think it's the same with Trading 212 (don't quote me on this...) but they are good options if you've got new money to add this year.

Have a look around for better rates, and decide whether you want an easy-access or fixed-rate ISA.

Newbie_John

Trading and Plum rates are for new money not transfers. Their rates are also variable, so expect them to keep dropping every few months. 

Depending on what's your goal you could split in half and move half of it to S&S ISA and invest in a fund - as an example Royal London Sustainable Leaders brought about average 10% return in the past 5 years, 16% in some, -2% in some. Or many other Vanguards that seem popular here due to low fees.