Can I transfer my Moneybox ISA to avoid penalty for more than 3 withdrawals

webmuppet

I just transferred my cash ISA to Moneybox (per the Moneysavingexpert most recent email) and I get 3 free withdrawals per 12 months. The interest rate is 4.58% dropping to 0.75% if you withdraw 4 or more times.

I don't have any intention to withdraw except in some sort of emergency but I'm curious, if I needed a 4th, could I withdraw the money and then immediately transfer the ISA to a new provider to get back to a better interest rate?

Also, I'm assuming that interest earned to date wouldn't be touched.

Yorkie1

If you wanted to get to a better interest rate elsewhere, then transfer the ISA with its funds still inside it. Don't withdraw the funds and then try to put them back into a new ISA elsewhere - the money is likely to count twice for the purposes of the £20K annual contributions limit.

I don't know whether a transfer would count as a 4th withdrawal and thus impact on the interest paid to date at the point of transfer. Probably best to ask Moneybox.

webmuppet

https://forums.moneysavingexpert.com/discussion/comment/81919468#Comment_81919468

I'm not talking about withdrawing the money to move it. I just mean if I needed to withdraw to use the money and ended up having to withdraw 4 times. After the 4th I would move to 0.75% interest. At that point is the best plan to just transfer to a new provider or would there be some reason I couldn't do that. Like I said, I'm not planning to do this, I'm just curious if transferring the ISA to a new provider after the interest rate had dropped to 0.75% would save me from the low interest rate. I'm assuming someone on here has done that.

They say "If you request a full withdrawal or a full transfer out to another provider, we’ll prepay any interest you’ve earned to date." so I assume any interest earned to date is safe. And I don't see anything in their terms that would stop me being able to transfer at any time.

https://www.moneyboxapp.com/faqs/how-does-the-cash-isa-interest-rate-work/

fabsaver

The point you make the 4th withdrawal is going to trigger the 0.75% rate on any money remaining in the account. They calculate interest daily so any interest earned at the higher rate up to the point of the 4th withdrawal isn't affected.

You can immediately request a transfer out but how long it takes isn't under your control. Best case scenario if the transfer goes smoothly it'll only take a few days. Worst case the transfer process could drag into weeks or months, while earning only 0.75% on the remaining ISA funds.

In your situation I'd be arranging a transfer out after the third withdrawal.

webmuppet

https://forums.moneysavingexpert.com/discussion/comment/81920030#Comment_81920030

Perfect. That's along the lines of what I was thinking. Just the terms are a bit woolly. Hopefully no chance of even needing 3 withdrawals but belt and braces and all that!