Splitting Existing CashISAs

Hi everyone,

A quick question regarding Cash ISA transfers! I have a large pot in a Cash ISA which I've built up using my allowance over the past 5years. I'm in a situation now where a portion of this is long-term savings and a smaller portion is stoozed funds.

I'm interested in somehow splitting this up via a transfer and/or a new subscription in 2005/6 so that some of the capital can earn a higher interest rate in a fixed rate or long-notice account, while some is left in a instant access Cash ISA just in case I am unable to continue rotating the 0% deals.

At the moment I've used up this year's allowance and transferred in all previous subscriptions, and this is all in an instant access M&S Cash ISA at 5.25% (although their base-rate margin guarantee expires at the end of this tax year). I think i'd benefit from higher interest rates if I had some of this in a fixed deal (esp if interest rates are going to come back down a fraction in the next 12-15months). I think i'm right in thinking you can only open two cash isa in one tax year if you are transferring the full amount from the previous one. Is this right?

If thats the case am I stuck with keeping the M&S CashISA for next year (but not putting any more deposits in to avoid subscribing in the new tax year), and opening a new Fixed Cash ISA with a new £3k subscription and then transferring across a portion of the M&S one? I was hoping to be able to pick a new instant access CashISA for next year too, but I think this would be against the rules unless anyone knows better!!?

Cheers for your advice in advance :)

whosyadaddy (in disguise)
Cider Country Solar PV generator: 3.7kWp Enfinity system on unshaded SE (-36deg azimuth) & 45deg roof

Comments

  • Update: In light of M&S Money's reduction in interest rate guarantee from the start of the new tax year (0.5% down to 0.25%, reducing the real rate from 5.25% to 5.0%), I'll be shifting soon.

    I think I'm going move my existing CashISA with them to someone new before the 5th April, either Abbey (5.35%) or First Direct if the T&Cs of their new product announced tomorrow works out okay.

    I've looked around the fixed deals and there are few rates which can beat Abbey and I don't think the interest rates are going to nosedive in the short-term so the fixed deals don't provide good value. I wonder whether Abbey's Postal ISA will keep the same guarantee into the next tax year?
    Cider Country Solar PV generator: 3.7kWp Enfinity system on unshaded SE (-36deg azimuth) & 45deg roof
  • isasmurf
    isasmurf Posts: 1,999
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    Who says M&S are going to reduce their interest rate? All they have announced so far is they are reducing their guarantee to pay 0.5% above base rate. They may still offer 5.25% at least in the short term, but perhaps they feel they need to have the option to reduce their interest rates at some point during the year. I wouldn't be too hasty to jump ship.
  • I didn't think there was any kind of rate guarantee on the Abbey postal ISA. I can't see the rates plummeting though, as we've already had enough bad press about this product! There's no transfer out fee either so if the rates do go down you can just switch again.
  • Fatboy_NSS wrote:
    I didn't think there was any kind of rate guarantee on the Abbey postal ISA. I can't see the rates plummeting though, as we've already had enough bad press about this product! There's no transfer out fee either so if the rates do go down you can just switch again.
    http://www.abbey.com/future/taxeff/savings_isas/savings_isas_posta_isa_rates.html

    In the very small print at the bottom:-

    *Postal ISA interest rate is guaranteed to be a minimum of 0.50% above the Bank of England base rate until 1st April 2005.

    Abbey have paid a 0.1% premium on top of this guarantee, hence the 5.35% rate currently.

    I'd be very surprised if M&S didn't reduce the interest rate on the 5th April. The language of their letter was very keen to point out the current rate of 5.25%, but did not say that it wouldn't go down after 5th April.
    Cider Country Solar PV generator: 3.7kWp Enfinity system on unshaded SE (-36deg azimuth) & 45deg roof
  • isasmurf wrote:
    Who says M&S are going to reduce their interest rate? All they have announced so far is they are reducing their guarantee to pay 0.5% above base rate. They may still offer 5.25% at least in the short term, but perhaps they feel they need to have the option to reduce their interest rates at some point during the year. I wouldn't be too hasty to jump ship.
    Maybe I'm just being cynical but I doubt they'll keep the rate at 5.25%, but we'll see!

    As for the exit penalties, is there a definitive list of MiniCash ISA providers who charge to transfer your ISA away from them?
    Cider Country Solar PV generator: 3.7kWp Enfinity system on unshaded SE (-36deg azimuth) & 45deg roof
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