Losing interest when transferring an ISA

robbi_2

I thought I was clued up on ISAs and saving money but I've just found out that all ISA transfers, even if you follow the instructions provided by the banks, are done by cheque, and you're losing interest while the transfer is taking place.

I've just transferred my ISA and it took 3 weeks for the money to move from one institution to the other. My money disappearing down a black hole for that 3 weeks I can handle but I lose 3 weeks interest. I'm taking the issue up with the new institution because they told me that I wouldn't lose any interest but, unfortunately - I've transferred it twice in a short space of time.

Beware - the better interest rate may be offset by the loss of interest in the transfer process and I'm told that the transfer cannot be done any other way for security purposes.

"let the buyer beware" obviously but is this how it is meant to be?

macca64

There are some providers who pay interest from the date of the cheque, so there is no lost interest. Nationwide do this and I understand that Abbey also do.

If you search this forum you'll find others that do.

macca64

Also bristolleedsfan posted a list on here of providers who guarantee no loss of interest, which might be of interest to you.

You

I was always under the impression that the most you will lose is maybe 5 days interest. I thought the up to 30 days bit is how long the bank you are transferring from take to close the old ISA and send the cheque. I presumed during this time you would still be earning interest in the old account. Are they closing the old account and sitting on the money for a few weeks before forwarding to the new ISA bank?

PauliPauli

macca64 wrote: »

Also bristolleedsfan posted a list on here of providers who guarantee no loss of interest, which might be of interest to you.

tried searching for the list, no luck, anyone got link to this list please? bristolleedsfan? Ta

bristolleedsfan

You wrote: »

I was always under the impression that the most you will lose is maybe 5 days interest. I thought the up to 30 days bit is how long the bank you are transferring from take to close the old ISA and send the cheque. I presumed during this time you would still be earning interest in the old account. Are they closing the old account and sitting on the money for a few weeks before forwarding to the new ISA bank?

"You " are correct the only interest that is lost if transferring to "some" providers is while the cheque is in the post and "up to" 2 working days following receipt.

Transferring out providers have a habit of posting out transfer cheques late in the week thus guaranteeing that they keep the interest over the weekend.

Nationwide, Abbey, Halifax, Saffron BS are known to backdate interest to date of out going transfer cheque to ensure no loss of interest.

Posters reports have suggested that Icesave and A+L dont backdate interest as described above. ( Any confirmed additions to those that do backdate interest automatically to date of outgoing transfer cheque would be welcome)

robbi_2

Thanks BristolLeedsFan. Add Direct Line to the lost interest list.

A&L told me when I opened the account that I wouldn't lose interest so I might have a case for being misrepresented - worth a try

bristolleedsfan

robbi wrote: »

A&L told me when I opened the account that I wouldn't lose interest so I might have a case for being misrepresented - worth a try

In the case of Abbey, Halifax and Nationwide the no loss of interest guarantee in relation to transfers in are stated on all the websites. Saffron I asked. ( it may or may not be on their website)

A+L i looked hard on its website a couple of months ago and found no mention, so can only go on other posters reported experiences.

Somebody ( not me :cool: ) could email A+L and ask them when they start paying interest on ISA transfers in. :idea: ( the hope is that providers that dont fully backdate interest on transfer ins will change their behaviour once they see they are effectively being named and shamed.)

I know from posts that Crabman is a fan of A+L ISA, he has never commented on when A+L start paying interest on transfers in.

King_Weasel

I find it incredible that ISA transfers are done by cheque.

But, even so, the loss of interest where applicable can surely only amount to about 3 working days plus a possible weekend. The fact that institutions seem to be allowed to take up to 30 days to effect the transfer cannot mean a potential month's loss of interest.

Someone in the know please tell me I'm right.