Fixed ISA Help

NebulaNova

Hi, I am looking at moving my Cash ISA to a Fixed ISA with NatWest.

I'm confused how Fixed ISA's work though.

If I move to a fixed ISA and then for any reason I need the funds 6 months later, can I close the ISA or move it to a cash ISA and they would deduct 90 days interest from what has been earned, but then give me the rest of the interest earned before the year is up?

I can open it now, but it says it won't start until Oct which is confusing. So does this mean I lose interest between now and when it would start?

Thanks

Catplan

https://forums.moneysavingexpert.com/discussion/6682096/fixed-isa-help

if you suspect you will need access to it then a flexible cash ISA would be a better idea than putting it into a fix where you will lose 90days interest if you want to withdraw.

cc123mm456

If I move to a fixed ISA and then for any reason I need the funds 6 months later, can I close the ISA or move it to a cash ISA and they would deduct 90 days interest from what has been earned, but then give me the rest of the interest earned before the year is up?

Yes you've understood this correctly. This is the NatWest rule for closure before the end of term:

I can open it now, but it says it won't start until Oct which is confusing. So does this mean I lose interest between now and when it would start?

The start date in October is the base date for calculating the 1 year or 2 year end date. Also for determining the last date that you can deposit funds. Interest is calculated daily from the date of your deposit(s). See the interest section from the NatWest summary below:

sausage_time

Regarding

Most fixed-rate ISAs do not permit withdrawals (or do with a penalty).

See this from https://www.moneysavingexpert.com/savings/best-cash-isa/#bestfixedrate - my emboldened text.

Fixed-rate savings are designed to lock money away for a set period and offer rate security in return. Yet by law, cash ISA providers MUST allow you to access your money. However, some require you to close the account or transfer out to get your cash. And most will levy heavy penalties on withdrawals – anywhere between 60 and 365 days' worth of interest.

mon3ysav3r

Not all (any?) fixed Cash ISAs allow partial withdrawals, but they ALL must allow you to either fully transfer the entire amount plus interest to another ISA (which could be a flexible Cash ISA), or receive the money outside of an ISA wrapper into a normal account (although of course you would lose the tax free advantage on any interest accrued on that money in the future).

The terms of a fixed cash ISA may say no access, this is however misleading, because if you carry on reading the ISA terms and it will mention what the penalty (or fee) is for an early withdrawal, usual defined by a certain number of days loss of interest.

NebulaNova

Ok thanks, so although interest is paid annually, it would work like -

£20k transferred - at 6 months, £500 interest would have been earned

They take away 90 days interest and pay you £20,350 - for example? Not estimates, it's just to give you an idea of my thoughts, so you technically earn some interest back even though you cancelled it early?

Bottom line is, providing I get my intial deposit back if I have to gain access to it, I'm not overall concerned. I was just worried they'd give you no interest and it would be less than £20k you get back.

NebulaNova

Also, if I transfer in an existing cash ISA to NatWest Fixed, I presume this would be ok even though my current ISA is sitting at £21,500?

clairec666

https://forums.moneysavingexpert.com/discussion/comment/82125509#Comment_82125509

With Natwest, you'll never get back less than what you put in. I unexpectedly had to withdraw from a fixed rate ISA after 1 month, so I got back exactly the amount I put in.

If you think there's a fair chance you will need to withdraw before the fixed term is up, then probably an easy access ISA is the better option.

theFlash

https://forums.moneysavingexpert.com/discussion/comment/82125451#Comment_82125451

Your comment here interest me as I've just been on the phone to them about this account. I was told that if I instigated a ISA transfer now, as that accounts 'start date' is 27th October 2025, the transferred monies would in effect earn no interest until that date. They also said that they do a full credit check on all account applications (unlike just about any building society). Note also that their online chat is international, in case that matters.

I'm not sure if I was given the correct information?

I contrasted this with a call to others (LBS, Nationwide etc), and they all said interest started the day the funds landed.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82125509#Comment_82125509

To all intents and purposes, 90 days interest is about three months worth, so if you'd have earned £500 in six months then you'd receive £250 of that in addition to your opening balance if withdrawing prematurely at that point.

Your concern about getting back less than you paid in is answered in the extracted wording above.

https://forums.moneysavingexpert.com/discussion/comment/82125512#Comment_82125512

Yes, transfers aren't related to annual contribution allowances.

flaneurs_lobster

https://forums.moneysavingexpert.com/discussion/comment/82125527#Comment_82125527

The 'not earning interest' bit - are you talking here about transferring a fixed term ISA that you want moved after its maturity date?