Closing one ISA and opening a new one

legless

Can anyone tell me if you already have an ISA and you want to open a new ISA somewhere else to get a better interest rate? How much can you open an ISA with? Can it be more than £3000?

hyposmurf

Why not transfer the ISA?If you close it and then reopen another ISA you will loose the allowance that you have paid in so far for your existing ISA.Just transfered mine and seems to have gone OK.

JasonLVC

As hypsmurf states you can only have 1 ISA account. If you withdraw money from your existsing ISA you lose the interest free allownce on it and it cannot be replaced.

The best thing to do is transfer it by opening a new ISA with a new provider and stipulating you want to transfer funds into it and then they will do the rest for you.

Not all ISA's will accept transfers though. Certainly the higher interest rated ones tend to be oly for new ISA's only. Yorkshire Bank currently offer 5.80% and accept transfers of any value into the fund whereas NS&I do not.

But never close your ISA down/withdraw money. Only ever transfer the funds or bite the bullet and lose your allowance for the year.

legless

At the moment I have an ISA with the BBB and I see Barclays are offering their ISA at 6.5%. I don’t know if it is for new accounts.

alastair_h

legless wrote: »

Can anyone tell me if you already have an ISA and you want to open a new ISA somewhere else to get a better interest rate? How much can you open an ISA with? Can it be more than £3000?

Yes best thing to do is transfer your ISA to better rate, as you can transfer what you have saved including interest to better rate and earn interest on the lot (compound), see link for dedicated MSE ISA area.
http://forums.moneysavingexpert.com/forumdisplay.html?f=18

You would have to check your new ISA accepted transfers in as some don't (Barclays Tax haven 6.5% [new money only], NS&I direct 5.8% etc). If you withdraw your ISA saving you will loose their tax free status.

For this financial year 2007/8 mini cash isa allowance is £3000. After 6th April - 2008/9's cash isa allowance goes up to £3600. So you could put £3k in today (if you haven't already), then £3k6 after 6th April. Lloyds are doing a 1 year fixed Rate ISA at 6.5% but only on £9,000+, below this the interest is poor.
http://www.lloydstsb.com/savings/fixed_rate_cash_isa.asp

cathodetube

legless wrote: »

At the moment I have an ISA with the BBB and I see Barclays are offering their ISA at 6.5%. I don’t know if it is for new accounts.

I went to Barclays today to inquire about their new ISA. As I took out one with them last year, recommended by Martin, I was told that I can't have two with them. They told me I would have to have to close down existing one, and they would send the money into my current account. Then the new account could be opened with the old money. I don't like that idea as it means I would lose my allowance for last year. They also won't give me the rate on the old account, as it will be changing soon.
I am not sure what to do now.

manic_saver

Just a quick question. I've just opened up an icesave isa about a week ago, while filling out the transfer form, i put 5th of april for my transfer date. I thought the 5th of april was the tax year not the 6th.

So should i contact icesave, or do you think they will know that i've made a slight mistake and correct it?

Thanks in advance.

alastair_h

cathodetube wrote: »

I went to Barclays today to inquire about their new ISA. As I took out one with them last year, recommended by Martin, I was told that I can't have two with them. They told me I would have to have to close down existing one, and they would send the money into my current account. Then the new account could be opened with the old money. I don't like that idea as it means I would lose my allowance for last year. They also won't give me the rate on the old account, as it will be changing soon.
I am not sure what to do now.

No don't withdraw funds , you are right you will loose their tax free allowance. The Barclays tax haven ISA does not allow transfers in, you can add £3,600 from 6th April or open it now (assuming you haven't used all of 2007/8's £3,000 allowance).

Check the ISA forum area for top tips
http://forums.moneysavingexpert.com/forumdisplay.html?f=18

Perhaps your best option would be to open Barclays with new money after 6th April and move your existing one to a better rate ASAP.

£££saver

I understand that it's not recommended to close your account but to transfer instead, but what if you've already withdrawn all the money?

Are you officially allowed to close the account, then re-open a new one with a better rate? Or do you have to deposit a small sum (eg £1) then transfer it?

Note: the ISA has been paid into in the current tax year but all funds now withdrawn.

Thanks

Nessie23

Hi you might want to have a quick look at MSE's guide for ISA transfers. http://www.moneysavingexpert.com/savings/cash-isa-transfers?dd

Essentially if you want to transfer the only option is not to close the account. You should instead leave the account you want to transfer open and give the details to the new provider. Remember you can only open 1 cash ISA per year for up to £5100

£££saver wrote: »

I understand that it's not recommended to close your account but to transfer instead, but what if you've already withdrawn all the money?

I am afraid if you have withdrawn all you money then it is no longer ISA money and you will be subject to the normal tax on interest rates.

£££saver wrote: »

Are you officially allowed to close the account, then re-open a new one with a better rate? Or do you have to deposit a small sum (eg £1) then transfer it?

Nope can't close the account prior to transfer - sorry (see notes above)

£££saver wrote: »

Note: the ISA has been paid into in the current tax year but all funds now withdrawn.

Do you still have an account open for this tax year?
If so how much money have you put into it cummulatively over this tax year?

Nessie

£££saver

Hi

Just to clarify, I still have allowance for this year and have probably only paid in about a half of the allowance, during this year.

I had to withdraw all of the money for a deposit, and want to start saving again, but my current ISA has a poor rate.

I guess what I'm trying to determine is which of the following options are possible:

1) Transfer to a new ISA, despite there being a current zero balance
2) Deposit a small token amount (£1) into the current ISA, so I can then transfer that to the better account
3) Close my current ISA, then open a new one and deposit my remaining annual allowance into it.

I've checked the guide but it doesn't really give advice regarding switching accounts that currently have no balance, and where there is also allowance remaining.

Thanks