ISA problem

dream--flower

I currently have just over £10,000 invested in ISAs in Halifax, all from previous years. At the moment I only get 5.25% on these ISAs, so this year I decided to transfer them to an ISA account in another bank. Last week I opened a Premier 21 current account with Alliance and Leicester which allowed me to open a high interest ISA account with Alliance and Leicester too, the Premier ISA Issue 2 that pays 10% interest. However I've just discovered that I can only transfer in half of my existing ISAs - the other half I have to invest in stocks. This isn't really ideal for me, but Abbey offer a similar 10% ISA that would allow me to transfer in all of my existing ISAs so long as I invest the same amount in their Guaranteed Growth Plan, which I am able to do. This would be more ideal for me. At the moment I have opened a Premier ISA Issue 2 with Alliance and Leicester but I haven't transfered any money into it, so would it be possible to cancel the ISA and open the one with Abbey instead? I asked this question to Abbey and they said that "it should probably be fine" but I'd prefer to be 100% sure before I go ahead and cancel the ISA account with Alliance and Leicester!

debbie42

Have you seen the following threads discussing these accounts?

http://forums.moneysavingexpert.com/showthread.html?t=835129
http://forums.moneysavingexpert.com/showthread.html?t=853305

dream--flower

I hadn't actually, I've only joined these forums today. But neither of those threads answer my question as to whether or not you can close an ISA account if you haven't transfered any money into it and open another.....

KiKi

Dream-Flower: you can open as many ISAs as you like in a year if all you are doing is transferring in. Whether you actually transfer in or not is up to you. The A&L one can sit there empty, or you could close it (depends what their T&Cs are). But opening an Abbey one to transfer in won't affect it.

However, even though you rather curtly told Debbie that the links she posted weren't answering your question (even though she was trying to help you) - she was absolutely right to point out what she did.

I would urge extreme caution in the Abbey's 10% offer. Tempting as it is because of the interest rate, the Guaranteed Growth Plan will negate that interest; the offer targets people who don't really understand what they will get back from it. It's not a product that's recommended by anyone I've seen in the know who's been posting about it.

So your question has been answered - but perhaps you should check out those other threads first, certainly the Abbey one.

KiKi

[Deleted User]

You can close an ISA and start saving in another if you've not already saved money into an ISA for this tax year.

dream--flower

Sorry if my reply was curt, that honestly wasn't intentional! I've read the above threads, but I still don't really understand why the Guaranteed Growth Plan isn't advisable. I think I'd be classed as one of the people who doesn't understand what they'll get back from it! They guarantee that you will receive 6% interest.... that's along the same lines as most regular ISAs and WebSavers isn't it? So what's that bad about the plan? Sorry if I'm asking very novice/annoying questions!

KiKi

Not annoying at all - that's what the forum is for!

That 6% is over three years, not per year. So that's approx 2% a year (it's actually less than that, as it allows for compounding interest - ie, interest that you get on your interest). Plus, it doesn't account for inflation, so it's 6% at the current rate. And you're tied in with it for three and a half years, and if you need to access your money then you're not guaranteed that you'll get your capital back.

The entire package of both ISA and GGP would make you about 5% / year over the 3.5 years (I'm quoting someone else from the Abbey thread who knows their stuff). Not a good deal - you'll get much better investments elsewhere.

None of the IFAs I've seen comment on this board about this product have anything good to say about it!

You're therefore better off transferring in to the A&L ISA at 6.25% with all your cash, and opening a new ISA at 6.5% with Barclays for this year's allowance.

I hope that helps you. Sorry for saying you were curt; the problem with the internet is that it's hard to tell the tone!

KiKi