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    A question concerning isa accounts

    Whats the point of keeping the money in the isa accounts as soon as the "bonus" period finishes?

    For instance, my barclays isa had 3.5% fixed for this tax year, but as soon as it ends (i.e. next month), i hear it will drop to a measly 0.1%. Meanwhile, Santander has a new isa coming, which promotes 3.5% for 2010/2011 tax year. What i was thinking of doing is withdrawing and depositing the money from the barclays isa to the Santander isa.

    When i presented this idea to the Santander finance person, she told me not to do that as I would lose my "tax benefits". Huh, I thought the only benefit was that the interest was tax free? I understand that the new isa does not allow isa transfers (in other words, transfer without losing your tax year deposit allowance), but it doesnt say that I cannot withdraw and deposit. The only disadvantage is that I would quickly shrink my deposit allowance (but id rather lose that than allow my money to earn 0.1%)

    Upon research, I see that some isa accounts that do allow transfers actually have a minimum requirement of £9000 of money to get a decent % return (or some other figure).

    Hmm, so maybe i should withdraw only a bit and deposit till i get about 9000 in total?

    opinions plz

    6 Comments

    Original Poster

    dcx_badass;8111012

    Don't withdraw it, transfer it instead. But I've not heard of any needing … Don't withdraw it, transfer it instead. But I've not heard of any needing £9000 first though.



    yeah i asked but this new account from santander says isa transfers not allowed. But she told me that I am still allowed to open the account (just means that i have 2 isas - one with barclays and one with santander)

    actually the 9000+ requirement for this certain isa is a tier based thing. I can have £1 in it, but then it is at a lower interest rate at which it isnt worth the trouble

    First rule of isa saving always transfer never withdraw.
    Second rule follow the first rule.

    Don't ever withdraw and reinvest.

    Always get your new ISA provider to to that for you or you will lose cash.

    The particular ISA that you're talking about - guaranteed to pay 3% over the base rate - is not open for transfers, only new money, I'm afraid.

    Be patient and watch deals on moneysavingexpert.com because the ISA market is competitive and someone will bring out a similar good deal for transfers next year.

    Meanwhile if you can't wait, check out First Direct.

    But be quick, it takes about a fortnight to exchange the paperwork because after you sign up you have to wait for them sending a transfer pack to fill in - all snail mail! :thumbsup:

    Original Poster

    archer1204;8111132

    First rule of isa saving always transfer never withdraw.Second rule … First rule of isa saving always transfer never withdraw.Second rule follow the first rule.



    cannyscot;8111151

    Don't ever withdraw and reinvest.Always get your new ISA provider to to … Don't ever withdraw and reinvest.Always get your new ISA provider to to that for you or you will lose cash.The particular ISA that you're talking about - guaranteed to pay 3% over the base rate - is not open for transfers, only new money, I'm afraid.Be patient and watch deals on moneysavingexpert.com because the ISA market is competitive and someone will bring out a similar good deal for transfers next year.Meanwhile if you can't wait, check out First Direct.But be quick, it takes about a fortnight to exchange the paperwork because after you sign up you have to wait for them sending a transfer pack to fill in - all snail mail! :thumbsup:



    so.... when would it b a good time to withdraw? if any?
    anyways, that santander person, already helped me open the 3.5% account (with nothing in it). Is that bad? As long as i dont deposit anything in there, im not locked in there for the tax year, right?

    Btw, yes i was (and still am) using mse to check for any new isa transfer-friendly deals

    Artonox;8111246

    so.... when would it b a good time to withdraw? if any?anyways, that … so.... when would it b a good time to withdraw? if any?anyways, that santander person, already helped me open the 3.5% account (with nothing in it). Is that bad? As long as i dont deposit anything in there, im not locked in there for the tax year, right?Btw, yes i was (and still am) using mse to check for any new isa transfer-friendly deals



    Depends on how much you're withdrawing/re-investing. If you've got the maximum say, you can't re-invest it until 5th April as any deposits you've already made this tax year would put you over the limit. If you wait until after 5th April, you can't deposit any more for the next tax year.

    But if you've only got say a couple of hundred then you should be ok...

    Artonox;8111246

    so.... when would it b a good time to withdraw? if any?anyways, that … so.... when would it b a good time to withdraw? if any?anyways, that santander person, already helped me open the 3.5% account (with nothing in it). Is that bad? As long as i dont deposit anything in there, im not locked in there for the tax year, right?Btw, yes i was (and still am) using mse to check for any new isa transfer-friendly deals



    you can only open 1 isa per tax year, so yes you did a bad thing if you dont now intend to use that account as you cant open another one elsewhere.

    re why it is bad to transfer , you get the £3kish allowance each year which you can keep adding to, but if you took out of your current isa and put it into a new money only isa you wouldnt be increasing the money you had built up tax free (hope this makes sense).

    ie if you had £3k invested in year 1, then year 2 you keep that account put in another £3k, then in year 3 you decide to open a new isa which you can transfer to so you withdraw some of the money & put it in manually istead of having £9 by year three you still only have £6k therefore you would have affected your tax allowance as you couldnt then put another £3k in somewhere else. i hope that is clear.

    I had my isa money locked in a 1 year fixed rate isa @ 3.5% and then at the end of the year they write to me offering me the option of either locking the money again (this time 3.05%) or if i dont lock it then it reverts to the crappy interest rate normal cash isa. If i was you i would call your current bank and ask if you can move the money to a locked fixed rate, see what they can do.
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