Best cash ISA transfer rates; how to get more from existing cash ISAs

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With interest rates so low I’m getting a lot of emails from women who are furious to find their cash ISA provider drops the interest rate on their savings – often to very low levels. If you have savings from previous tax years in cash ISAs, the rules let you switch some or all of your cash to another cash ISA (or a stocks and shares one if you want to invest). Which are paying the best rates at the moment?

Existing ISA savings
If you haven’t checked the interest rate on your existing cash ISA, do it now. Some old ISAs are paying 0.1% (which would be just £10 interest at the end of the year on £10,000 of ISA savings). National Savings & Investments’ Direct ISA interest rate drops from 1.5% to 1.25% on November 16th.

Best buy rates – notice accounts
As I write this, the Shariah-compliant bank, the Al Rayan Bank is paying the best return of 2% AER (annual equivalent rate) on a notice account where you have to give 120 days’ notice. As it’s a Shariah-compliant bank, you don’t get interest but instead you receive an expected profit rate.

Account operated? You can operate the account online, by phone, in a branch or by post.

Minimum deposit? You have to pay in at least £250 to open this account.

SAVVY TIP: The name may not be familiar, but Al Rayan Bank used to be called the Islamic Bank of Britain and has been offering accounts in the UK since 2004. Money you have in this bank is covered by the Financial Services Compensation Scheme up to a limit of £85,000.

Teachers Building Society has a cash ISA notice 90 (a cash ISA account with 90 days’ notice) paying 1.5% AER interest.

Account operated? Online or by post.

Minimum deposit? You have to pay in at least £100 to open this account.

Easy access cash ISAs

Nationwide Building Society has an easy access ISA, but it’s only available to customers who already have a Flex account (current account). It’s called a Flexlusive ISA. It pays 1.6% AER interest and there’s no notice period.

Account operated? Online or in a branch.

Minimum deposit? You have to pay in at least £1 to open this account.

Virgin Money has a defined access cash e-ISA, which you can operate online. You get an interest rate of 1.56%, but only if you make three or fewer withdrawals in a calendar year.

Account operated? Online.

Minimum deposit? You have to pay in at least £1 to open this account.

The Post Office has an online cash ISA which is currently paying 1.51% AER. Be aware that this cash ISA includes a bonus rate of 0.86% which ends after 12 months.

Account operated? Online or in a branch.

Minimum deposit? You have to pay in at least £100 to open this account.

Coventry building society has an easy access cash ISA which pays 1.5% interest.

Account operated? Online, via the phone or by post.

Minimum deposit? You have to pay in at least £1 to open this account.

HSBC has a loyalty cash ISA which pays 1.5% to existing HSBC Premier customers. If you have an HSBC Advance account you’ll get 1.4%, and if you have another HSBC bank account, you’ll get 1.2% interest. The loyalty rate only lasts for 12 months, after which the interest rate drops to 0.5%.

SAVVY TIP: The interest rate on this account is due to fall to 1.3% for HSBC Premier customers, 1.2% for HSBC Advance customers and 1.1% for other HSBC bank customers on January 16th. The standard rate remains at 0.5%.

Account operated? Online, via the phone in a branch.

Minimum deposit? You have to pay in at least £1 to open this account.

Transfer rules
The rules around ISA transfers aren’t particularly straightforward and if you get them wrong you could find your savings lose their tax free status.

– The first thing is that you mustn’t close down your cash ISA account, take the money out and then put it into another ISA.

– Instead, you must contact the company that you want to switch your cash ISA to and ask them to do the transfer (by filling in a transfer form).

– Once you’ve done that your money should be switched from your old ISA provider to your new one, within 15 working days.

– Some ISA providers will pay interest as soon as they’ve received your application.

How much you can transfer
If you have money saved in a cash ISA from previous tax years, you can transfer some or all of it.

– If you’re moving your cash ISA from the current tax year you have to transfer all of it (or none at all).

– You can transfer a cash ISA into a stocks and shares one but you can’t do the transfer the other way. Phew!

Transfers in accepted?
Not all banks and building societies accept transfers in. Some banks launch cash ISAs with headline grabbing interest rates but lock out money from existing cash ISAs whereas others are specifically aimed at the transfer market and some providers may add extra restrictions to transfers.

Related articles:

How much can you save and transfer in your ISA each year?

Compound interest explained

How to profit from tax free and tax efficient investments