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Best cash ISA transfer

Transferring your ISA to an account with a higher rate of interest has now become far easier.

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Pen and notebook written with ISA (individual saving account) on white wooden background.

Is your Cash ISA still paying you the best rate of interest? Transferring your Cash 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 deals and why it could be a good move to switch to a different Cash ISA provider.

Are you earning enough interest?

It could be time to find a new savings account, find and compare ISAs with our partner

Why should I transfer my ISA?

When you are looking for the best Cash ISA for transfers, it is a good idea to shop around and see which providers are offering the best ISA transfer rates. 

At the moment, interest rates on savings accounts are very low. This is because the Bank of England has kept its base rate low, and this affects both savings rates and mortgage rates.

While low interest rates can be good for borrowers and people with loans or mortgages, it is not good news for savers. The interest rates on Cash ISAs are currently quite low because this reflects the low Bank of England base rate, which is not expected to rise any time soon. As of November 2020, the base rate is 0.10%. 

How can I find the best Cash ISA transfer deals?

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. This is because financial services companies adjust their borrowing and savings rates in response to the base rate.

A Cash ISA deal that originally looked attractive may now be paying a rate of interest that is no longer competitive.

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 0.5% AER, you would earn £50 in tax-free interest per year. However, if you were to switch a better Cash ISA account, paying 1.5% AER, this would increase by £100 to £150 in interest a year.

Check to see what rate your Cash ISA is paying, if it does not match up to the best interest rates available, then it might be time to switch.

Should I keep my Cash ISA?

A Cash ISA, also known as a Cash Individual Savings Account, is a tax-free savings account. You can save money into your Cash ISA each tax year and it is a good way to build up your savings and perhaps put away money for a rainy day. The tax year runs for 12 months between 6 April and 5 April the following year.

In the 2020 to 2021 tax year, you can put up to £20,000 of your money into a Cash ISA.

Everyone aged 16 or over can have a cash ISA (but for some ISAs, usually with stocks and shares options, you must be 18). Otherwise, there is no age limit or preference to ISAs.

A Cash ISA can be a good place to save up money for the future. That money can grow tax-free. You should keep your Cash ISA, even if you want to transfer it to a different provider, rather than close it down and open a new one. That is because transferring your Cash ISA will keep all your tax-free benefits intact.

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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 Cash ISA. If you withdraw money from your ISA you will lose your tax-free benefits. 

To transfer your ISA, when you have opened your new Cash 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 a Cash 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 Cash ISA for you. Just make sure that you do not close down any ISA accounts until you are sure that the transfer is going ahead. Otherwise, you might lose your tax-free benefits. 

Be aware that not all new Cash ISA accounts allow you to transfer your existing ISA savings. Some of the best rates are offered on ISA accounts where you cannot transfer, so check this before you apply.

Also, you should check before you make a Cash ISA transfer what the terms and conditions of your existing Cash ISA allow. This is because your existing provider might make a charge if you want to transfer out. Most providers allow you to make a transfer, but some do levy a penalty if you want to transfer out. 

What types of Cash ISA should I transfer to?

When you are looking at the different Cash ISA options you have three main choices:

  • Instant access (or easy access) cash ISAs – you can take money out of your account without having to give notice. It may be that the interest rate is lower on this type of Cash ISA to reflect the greater flexibility.

  • Notice cash ISAs – you need to tell the provider that you wish to withdraw the money, and then wait between 30 and 120 days before you are allowed to make the withdrawal, otherwise you may lose the interest you have built up in the account.

  • Fixed-rate cash ISAs - these ISAs tie up your savings between one and five years, providing a fixed interest rate for that term. This is an option if you do not mind putting away money that you will not need for a while.

Best cash ISA transfer – remember to shop around

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.

Are you earning enough interest?

It could be time to find a new savings account, find and compare ISAs with our partner