An Individual Savings Account offers tax-free savings for the masses, but don't rely on your loyal custom to secure the highest rate of interest. Performing a cash ISA transfer to a best buy product is highly recommended. Current Inland Revenue rules permit an investor to put their £10,200 in a stocks and shares ISA or split their ISA allowance between a cash ISA and a stocks and shares ISA.
How to Transfer an ISA
A cash ISA transfer is initiated by completing the relevant forms of the new Individual Savings Account provider. These will need to be posted out, printed off or collected as a signature is fundamentally important. An investor can consolidate several cash ISA's under one roof.
The forms provide room for ISA transfers from different providers. The process is completely free and 'should' be completed within 30 days. Once completed, a letter will be sent to the investor confirming that this has taken place.
When Should an Investor Consider a Cash ISA Transfer?
- Higher interest. After using an online comparison service the investor realises that they don't have one of the best ISA accounts. There are hundreds of products available so it is important to identify those offering the most favourable rates, especially if retired or on a fixed income.
- Switching to a fixed-rate ISA. If a saver feels that interest rates are likely to fall, they may wish to perform an ISA transfer from a variable rate ISA to a fixed-rate ISA.
- Fixed-rate ISA matures. Following maturity, the investment can either be rolled in to a new fixed term ISA or become a variable rate ISA. If no longer one of the best ISA accounts, a saver may wish to move their money to a more favourable account.
- Consolidate ISA's under one roof. Having multiple Individual Savings Accounts can be difficult to manage. A cash ISA transfer allows a customer to benefit from greater simplicity. Some financial institutions also offer more favourable rates for larger, consolidated balances.
- Switching from a cash ISA to a stocks and shares ISA. Recent changes now allow an investor to switch from a cash ISA to a stocks and shares ISA, but not the other way around. This permits a more aggressive investment plan.
Transferring a Cash ISA for a Better Tax-Free Savings Interest Rate
It should be noted that, due to business volumes, many banks are taking considerably longer than the 30 days specified by HM Revenue and Customs. Some financial institutions, such as Nationwide, have stopped accepting them completely.
There are a number of banks accepting cash ISA transfers so it is important to shop-about for the best ISA accounts. Tax-free savings are important for those on a fixed income, such as the elderly, so shopping around can significantly improve your monthly income.
Those who found this article useful may be interested in reading about securing Higher Returns From a Stocks and Shares ISA or deciding whether a Cash ISA or Savings Account is preferable.
Sources
"Full ISA guide." Money Saving Expert.
"Saving and investing with ISA's." Directgov.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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