ISA rates for cash ISA holdings are not exactly lucrative in the current super-low interest rates environment.
However, if anything, that makes it all the more crucial for ISA holders, especially those who have been using all or part of their ISA allowance for a number of years, and have built up a good savings pot, to consider an ISA transfer.
It’s advisable to reassess your current ISA provider every year or two to make sure savings are working as hard for you as current market conditions allow.
If several ISA accounts from different years are with different providers, consolidating them by transferring them all to one provider with a better rate will bring the additional advantage of more convenient administration.
Let’s take a look at the main considerations when it comes to ISA transfers and then some of the top ISA rates available in 2017.
ISA Transfer Rules & Regulations
While only one new cash ISA can be opened and paid into each year, ISA transfers do not count as ‘paying in’ and as many can be made as the holder wishes.
Variable rate cash ISAs should have no restrictions on transfers and all the should be required is for the holder to fill out an ISA transfer form.
It is important when opening a new ISA, or transferring into one, to make sure there are no restrictions on future transfers, or if there are that you are aware of them and accept the condition in order to secure a higher interest rate.
Cash ISA accounts that do or may have restrictions on transfers are usually those that offer a fixed interest rate.
Fixed rates tend to come with the condition that cash is locked in for an agreed period of time.
Exit charges on fixed interest cash ISAs may mean it doesn’t make sense to transfer during the lock-up period as they will probably nullify the benefit of a better interest rate available elsewhere.
Compare Our Top 10 ISA Transfer Rates
How Long Does it Take to Transfer an ISA?
- Government regulation means that Cash ISA and Cash Lifetime ISA transfers should take no longer than 15 days.
- Stocks and Shares and Innovative Finance ISA transfers should take no longer than 60 days.
One important restriction to note is that while there is no restrictions on transferring ISA allowances from previous tax years, it is not possible to transfer the current year’s allowance in part.
Best Fixed Rates for Transferring Your ISA – 2018/2019 Tax Year
Has your fixed-rate deal matured and you are stuck on a low rate?
If so, and you’ve been waiting to reinvest, these are the best rates currently available on ISAs to transfer into by the end of the tax year.
- 8 per cent AER
- 3 Year Term
- Tax free interest
- Minimum investment: £5,000
- Good to know: This is a not a cash ISA, it is in fact one of the new innovative finance ISAs.
The superb rate is generated from loans to small businesses in the UK. As such, it is not covered by FSCS.
- Pays interest quarterly into a nominated bank account. Good for those seeking income rather than compound growth.
With this account you can transfer in from different ISAs, as long as you have not opened or paid into another IFISA within the same tax year.
The Best Cash ISAs for Transfers
Shawbrook Bank – 5 Year Cash ISA Bond
- Interest rate: 2.30 per cent AER
- Minimum investment: £5,000
- Protected by FSCS – up to £85,000
- Good to know: You can receive interest monthly or annually
- Maximum balance of up to £250,000
- Must be 18 to open an account.
With this account you can transfer in from Cash ISA or Stocks and Shares ISA providers, and you will have to do so at the same time as opening the account.
Halifax 5 Year Fixed Rate ISA
- Rate: 2.25% Gross/AER
- Term: 5 Years
- Minimum opening deposit: £500
- You can access the account via branch, online or post.
With this account you can transfer funds online, and they also pay interest on your funds while they are being transferred.
United Trust Cash ISA Bond
- 2.25% Gross/AER
- 5 Year Term
- Minimum deposit: £15,000
- Maximum deposit: £1,000,000
This account is only currently available for transfers, but you need at least £15,000 in your ISA.
Transferring from a Lifetime ISA
Transferring funds from a Lifetime ISA into a standard cash ISA before the age of 60 will mean facing a 25% withdrawal fee.
This is essentially returning the 25% income tax rebate top-up that the government will have contributed to the Lifetime ISA’s balance if the funds are not to be spent on a first-time buyer’s property deposit or retirement as intended.
However, you will not be charged if you are over 60, buying a property or are transferring to a different Lifetime ISA account.
Transfer into a Stocks and Shares ISA
For savers who have decided to move all or part of their cash ISA holdings into a stocks and shares ISA, in an attempt to realise better returns, the process is also relatively simple.
If your cash ISA provider also offers a competitive stocks and shares ISA product you are happy with then you will simply fill out a transfer form and move the cash into the new ISA.
The process is approximately the same if transferring out of a cash ISA to a stocks and shares ISA with another provider.
The new provider will provide a transfer form and then coordinate the transfer with your current cash ISA provider. The process will, however, be slightly longer and may take up to 60 days.
Transferring from Stocks and Shares ISA into a Cash ISA
If transferring from a stocks and shares ISA into a cash ISA, for example if retirement is approaching or any other reason the holder may wish to have ready cash available to them, the assets will first be sold and converted into cash.
The cash balance can then be transferred into a cash ISA.
Stocks and shares ISAs tend to offer negligible if any interest rates on cash held in them so it generally doesn’t make sense to leave cash in a stocks and shares ISA for any length of time.Last updated: April 13th, 2018