Transferring your ISA to an account with a higher rate of interest has now become far easier.
We explain what you need to know about the best cash ISA transfer and why it could be a good move to switch.
Why should I transfer my ISA?
With the low base rate, many people may find that the interest rate on their cash ISA has fallen way below what it was when they took out their account.
In these difficult financial times, it is more important than ever to make the most of your tax-free cash ISA allowance by making sure you get the best cash ISA transfer interest rate.
For example, if you had £10,000 in a cash ISA paying a rate of 1.5% AER, you would earn £150 in tax free interest per year. However, if you were to switch a better account, paying 2.5% AER, this would increase by £100 to £250 interest a year.
Check to see what rate your ISA is paying, if it doesn’t match up to the best interest rates available, then it’s time to switch.
How do I transfer my ISA?
It is far easier to transfer your ISA than you might think.
The most important thing to remember is that should never just withdraw your money from your ISA – or you will lose all your tax free benefits.
To transfer your ISA, when you have opened your new ISA account, ask your old ISA provider for an ISA transfer form and give them your new account details – this will ensure that your bank treats it as an ISA transfer, not an account closure.
Alternatively, when you open your new account, your new provider may be able to arrange to transfer your old ISA for you.
Be aware that not all new ISA accounts allow you to transfer your existing ISA savings. The best rates tend to be for ISA accounts where you cannot transfer, so check this before you apply.
How long does it take to transfer my cash ISA?
The transfer times for ISAs were changed in 2010 when the Office of Fair Trading (OFT) ruled that cash ISA transfers were to take no more than 15 days.
This was a significant improvement on the old system where your money may have disappeared for up to two months before resurfacing in your new ISA. The ruling also asked banks to continue paying the interest throughout the transfer time.
Best cash ISA transfer
Always make sure you compare the different savings accounts on offer before you transfer your ISA. You can compare cash ISAs with uSwitch and compare them by a range of factors, including the interest rate and minimum investment, to find the cash ISA that’s right for you.