ISA transfers - Things to remember

Growingold

With better rates popping up what seems like everyday it is easy to get carried away and arrange a transfer to a new account offering a better interest rate without stopping to think about two important details.
Have I made a withdrawal from the existing ISA this tax year and is it flexible?
If the answer to both these questions is YES then we need to remember by transferring (without replacing what we have withdrawn) we lose that part of the annual allowance we have withdrawn.  There are a few exceptions that have been reported by other members. Skipton if you transfer to a new ISA while retaining the same account number (you will either need to message or ring them to do this).  Other providers may do this too so CHECK before opening a new ISA with the same provider

clairec666

Good advice. A couple of things to add:

1. If you're unlikely to deposit anywhere near £20000 this tax year, you don't have to worry about flexible ISAs, as you'll have plenty of leeway with the year's allowance; although it's still worth keeping in mind in case you get a windfall later in the year.

2. Transferring for a better interest rate can sometimes be more hassle than it's worth, so check how much money you'll gain, especially with all these "newbie bonus" rates. An extra 0.1% interest might sound good, but if you've got £20000 in your ISA that's just a £20 gain, and if there's hold-ups with your transfer and you have to spend time chasing it up, it might take more than £20-worth of your time.

friolento

There is also the pitfall of some providers paying substantially less than their headline rate for transfers in. 

LeafGreen

better rates?  I admit that I haven't been following rates that closely but I feel we are currently in a period of decline.  Or have we hit the bottom and they're on their way back up again?

eskbanker

LeafGreen said:

better rates?  I admit that I haven't been following rates that closely but I feel we are currently in a period of decline.  Or have we hit the bottom and they're on their way back up again?

Just because market-leading products have been following base rates down, that doesn't mean that everybody is always using these best accounts, so there will be opportunities for vast numbers of ISA holders to move to better rates than what they're currently in....