Chip Smart Cash ISA - Beware this condition...

w0z

I dsagree, the terms are clear, any unpaid interest will not be added if you transfer out, although I agree that it woulld be a sensible strategy is to instigate the transfer as soon as the monthly interest is paid.

As you can't know for sure how long a transfer will take to complete you are therefore exposed to a loss of interest; you might be lucky, it might only be a couple of days on £5000, no big deal on the other hand you might lose the interest for a lot longer on a much higher balance which is a big deal.

If the flexible balance moved with the isa transfer that would be another way out as you could withdraw just after interest was paid and then transfer I don't think it does but I don't know for certain.

flying_ferret

Yes, slightly regretting opening a Chip Smart ISA now I've found out about this catch.

I'd read in the ISA T&Cs that interest is paid monthly and that if you transferred out you would forfeit unpaid interest. "No problem," I thought, "I'll just transfer out as soon as my month's interest is paid."

But what I think is really sneaky (and I didn't originally see) is that interest isn't paid until the 10th working day of the following month. For example, August 2026 interest isn't paid until 14 September.

So if you want to transfer out, either you wait to receive the previous month's interest, initiate the transfer, and lose unpaid interest accrued in the current month (i.e ~2 weeks of interest, plus the time it takes to process the transfer). Or you transfer out at the beginning of the month before any monthly interest has accrued, but miss out on the previous month's interest payment.

The first strategy seems best, but you lose money either way. It feels like they're holding your money hostage.

I thought a workaround might be to open an ISA with a new provider and gradually feed the Chip ISA into it via partial transfers, but they've closed that loophole by only allowing full transfers out.

Ballard

https://forums.moneysavingexpert.com/discussion/comment/82042557#Comment_82042557

I got caught out today as I’d forgotten about a few hundred quid going out of one of my accounts and didn’t have enough to cover it. I’ve had to withdraw some from my nationwide regular saver today, which isn’t a problem.

I’m wondering whether it’s worth transferring £2,000 out every day and transferring it straight back in. So, today I request £2,000 which will arrive tomorrow. Tomorrow I transfer it back (less any daily requirements) and repeat. Seems a bit of a faff, but would solve the problem. The biggest monthly bill I have is my credit card which is up to £1,200.

kokolino23

Anyone transferred a cash ISA from T212 to Chip? Is this possible, I can't find anything regarding this on their T&C's.

Thanks

kokolino23

Actually, I found this:

You can transfer funds in from a Cash ISA that you hold with another provider to your Chip Smart Cash ISA. To make a
transfer, you should request this in your Chip app. Your current provider may impose exit charges or other costs
associated with the transfer. Please check with your current provider.