It may not always be in your best interest to chase higher interest rates. Transferring your cash ISA to an alternative provider offering a higher rate of return may seem obvious but it is important to consider all of your needs carefully.
Does your new provider give the access to your money you require? Does their product best meet your particular purpose? Some ISAs work better for saving towards a first home, others are tailored for saving towards retirement. There can be a few things to think about, so we’re here to help you make the right decision.
There are a number of reasons to transfer an ISA. The good news is, whether you’re on the lookout for a more competitive interest rate or you would like all of your cash ISA funds to be with one provider, transferring your cash ISA is a simple process.
When transferring money from one ISA to another, you must transfer the full amount of your current year's ISA subscriptions. However those from previous years can be transferred either in part or in full.
When transferring an ISA, you must allow your providers to arrange the transfer on your behalf. Failure to do this may mean your savings lose their tax-free status.
See below for a step-by-step guide to transferring your cash ISA.
Find the right cash ISA rate for you
If you’re on the lookout for an alternative cash ISA provider, it’s not just interest rates that should influence your decision. It’s a good idea to consider factors such as how quickly you will need access to your finances and what you’re using your cash ISA to save for, such as your first home or retirement, to find the best cash ISA for you.
Factor in penalties
If you’re working out the benefits of transferring your cash ISA, have you factored in the possibility of penalties from your current provider? All banks and building societies will let you remove your money if you choose to do so. However, you may be penalised in the form of a reduction in interest.
If your provider does charge you for transfers, you should work out whether the cost of the penalty is worth the advantages of moving to a new bank or building society.
Finally, you should always make sure you choose a new provider that accepts transfers, as not all banks and building societies are obliged to do so.
Fill in an ISA transfer form
Once you have found the right bank or building society for you, your new provider will ask that you fill in an ISA transfer form. Here, you will supply your new provider with basic personal information and your current account details.
Your ISA transfer should take no longer than 15 days. However, if you’re still waiting for your transfer to come through after this time, you should contact your provider as soon as possible.
Stocks and Shares ISA transfer rules are similar to those of standard cash ISA transfers. You will need to fill out an ISA transfer form with your new provider to indicate which investments you’d like to sell.
The full timescale for this type of transfer can vary, depending on the type of investments you’re selling. However, once your investments have been sold, the transfer should be complete within 30 days.
All banks and building societies will let you remove your money but you may receive a reduction in interest. If your provider does charge you for transfers, you should work out whether the cost of the penalty is worth the advantages of moving to a new bank or building society.
It’s a good idea to consider factors such as how quickly you will need access to your finances, too. Some ISAs provide instant access, whereas other do not.
Finally, you should always make sure you choose a new provider that accepts transfers, as not all banks and building societies are obliged to do so.
Should you like to transfer your ISA to us, simply give our Savings Team a call or visit us in-branch to get the ball rolling.
For more information on cash ISAs, refer to our comprehensive guide to cash ISAs. For more information on setting up a cash ISA with Newcastle Building Society, view our full range of products or contact us.
With Newcastle Building Society, transfers from other Lifetime ISAs are now available, too.
There’s no need to worry if you don’t use your full ISA allowance. This tax year, UK savers over 18 are entitled to save up to £20,000 tax-free in an ISA. You have until midnight on April 5 to add to your account before the new tax year begins on April 6 and the allowance is reset. Find out more about the ISA deadline.
If you don’t use all of your allowance before the deadline it won’t affect how much allowance you’re entitled to in the future.
If a chat would help put your mind at rest, why not pop in to your local branch so we can talk you through your options? We’d love to see you and we’re always here to help you make the right decisions and connect you to a better financial future.
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