If you thought that the Cash ISA that pays the highest rate should top the list of the best ISAs, you must think again. How would it feel if you’re hard earned money is saved in an account, which does not allow transfers, and the base rate of interest goes high? This would mean that you are stuck and cannot transfer your savings to a higher paying Cash ISA.
This indeed suggests that while selecting cash ISA, one must consider the best Cash ISA transfer facility offered by these banks. It has become much easier now to transfer your ISA to an account offering higher interest rate.
Why should I transfer my ISA?
In these difficult economic times, when the base rate is quite low, it is imperative for people to look for highest paying cash ISA rates to make the most of their ISA allowance and earn tax free interest. This may call for being able to switch your savings to an account with better rates in the market. If your cash ISA is not paying the best rate of interest available in the market, it is time to make a switch.
Best Cash ISA Transfers
Savers took a sigh of relief when it was announced by the Office of Fair Trading in December 2010 that cash ISA transfers should not take more than fifteen days. This indeed is a great progress from the earlier system, which took two to three months to make such transfers. The transfers have been made further lucrative by the ruling that suggests that the banks will be required to pay the interest during the entire transfer time.
Best Cash ISA providers
| Provider | Interest Rate (AER) | Minimum Investment |
|---|---|---|
| Nationwide e-ISA | 3.10% | £1 |
| Halifax Direct Reward | 3.00% | £1 |
| Kent Reliance BS | 3.01% | £1 |
| NatWest e-ISA | 2.00% | £1 |
Best Fixed Rate Cash Transfers
| Provider | Interest Rate (AER) | Minimum Investment |
|---|---|---|
| Aldermore 1 year | 3.33% | £1000 |
| Santander 2 years | 3.7% | £500 |
| Halifax 2 years | 3.65% | £500 |
| Northern Rock 2 years | 4.26% | £500 |
| Halifax 4 years | 4.4% | £500 |
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How to Transfer savings from Cash ISAs?
There is one golden rule that should be abide by when considering transferring of cash ISA; never ever withdraw money from any cash ISA. In doing so, you may lose out on the tax benefit of ISAs. A better way is that once you have opened a new ISA account with a provider, ask the old/current ISA provider for the transfer form. Also, give them the details of your new account so as to make sure that they treat it as a transfer and not as the closure of the account. Other way is to ask your new ISA account provider to arrange for the transfer of your old ISA, which they can very well manage.
There is a catch when it comes to selecting an ISA account provider that offers good interest rate. The irony is that most of the best rates are offered for ISA accounts that do not allow transfers; make sure to check out this facility before opting for an account.
What should I look out for when transferring ISAs?
Some providers, though not many now, charge a small penalty for transferring out the savings. This may be in the shape of loss of interest of 30 days; however, some may even have more stringent transfer policies. Make sure that the loss of interest on transfers does not eat out any benefit of interest that you may gain on switching to a new provider.