It is possible to transfer your cash ISA to another provider if you can get a better rate of interest for your money, however in order to make sure that you don’t lose any interest, you need go about it a certain way.
First of all you need to trawl the market for a cash ISA that has a better rate of interest than the one you have.
Most importantly you need to find one that allows you to transfer your money in as not all of them do, especially if it’s already in another cash ISA. A good comparison site will tell you whether they accept transfers or not. If you are going to your bank or building society, please ask the question as they are not going to offer the information straightaway.
So, here are the steps:
- Check with your existing ISA that there are no penalties for transferring your money. You need to check which kind of cash ISA you have, as you may have a notice one, therefore you need to give the right amount of notice before you can take the money out without penalty. If it’s a fixed rate ISA, you may not be able to close it at all until the fixed rate ends.
- Once you are happy that you can transfer your money and you have found a cash ISA that will accept transfers, the next thing you need to do is open the new cash ISA with whom you want to switch to. Tell them that you want to do a cash ISA transfer, so they are aware that the money is coming from an existing cash ISA.
- Complete the ISA transfer form. You can find them on the bank or building society website, by phone or you can make an appointment and complete it with an account manager.
- Your new cash ISA provider should do all the transfer work on your behalf. They will contact your existing provider and arrange to transfer the money directly into your new account.
- It is important not to close your account before the new one is opened as you will lose your tax free benefits, let the bank or building society do this for you.
If you stick to these steps it should be a clean and painless process.
How much money can I transfer?
You can transfer what you have saved in previous tax years, it doesn’t have to be all, you could just transfer some.
However any money saved in the current tax year can only be transferred in full or left alone, you cannot transfer a part of any monies saved in the current tax year.
How long does it take, when does interest start to be paid, and will I lose interest?
It should take no longer than 15 days to complete the process, this is an industry standard, so it could be quicker. If you have lost interest because they have taken longer, you can make a complaint to get your lost interest back.
The new ISA provide will backdate interest to the last day that you earned it with the old provider in order that you don’t lose any interest. So if it takes 15 days, then your new provider should start paying interest from day 16. Some providers will actually pay interest from the moment you put in your application, so it’s worth asking the question before switching.