Bank notes If you put money into a cash ISA in previous tax years, you should compare your rate with what is currently available and consider transferring to a new account. But take care as there are strict rules about moving ISA money. You cannot just take it out and put it in another. You have to get the banks to move it direct from the old ISA to the new.
Step 1: find the new ISA. Pick one that...
a) allows transfers in from other ISAs.
b) pays as high an interest rate as possible. For an instant access account that allows transfers in that means around 3% or as close as possible.
Step 2: apply for the ISA. Some will allow you to open it online. Others insist on seeing your face in a branch. Daft, but there we are. In any event you will need your National Insurance number. And if face to face proof of address and who you are.
If you are asked if you want to move money in from another ISA answer ‘yes’. Sometimes you are not asked and have to fill in a paper form. You can move money in from more than one old cash ISA if you want.
When you are asked if you want to pay new money in, take care. If you put money in then that means you cannot open another cash ISA this tax year. But a separate new cash ISA that does not accept transfers in may offer a better rate of interest for this year’s money. So it is best to open your transfer ISA with zero pounds ready to move your other ISAs in.
Step 3: Make sure the transfer has happened. Sometimes there is a long delay. It should not take more than 15 working days. Complain if it does.
Step 4: If you want to put new money into an ISA using this year’s allowance – which is up to £5,340 – find the best rate for new cash ISAs and open one. You can always add more during the year up to that maximum amount.
Step 5: Relax until this time next year when you should repeat the procedure as this year's ISA rates for both transfers in and new money will probably be cut to next to nothing.
Written by Paul Lewis, this article was first published on April 13, 2011. Paul's opinions are his own and for general information only. Always seek independent, professional, financial advice.
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