Flexible cash ISAs – what are they and who offers them?

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If you have a cash ISA, you may be able to take money out of it and replace it. What are flexible cash ISAs – what are the rules and which banks offer flexible cash ISAs?

A guide to flexible cash ISAs

The government announced a change in the rules in the March 2015 Budget to say that from April 6th 2016, banks and building societies would be able to offer flexible ISAs. These flexible ISAs would give savers the chance to take money out and replace it again, even if you’ve already paid in your full ISA allowance.

The old cash ISA rules meant that once you’ve paid in the maximum amount to your cash ISA, if you take money out, you can’t top your ISA up again. The new rules, that came into force from April, mean that you’ll be able to take money out of your cash ISA and replace it.

SAVVY TIP: Generally, only variable interest rate cash ISAs can be flexible because fixed rate cash ISAs normally have a clause that says you can’t take money out of them until you cash them in. If you are allowed to take money out you generally have to pay a penalty by way of lost interest.

How a flexible cash ISA works

Under the rules before April 6th (non-flexible ISAs), if you paid £15,240 into your ISA, which is the full ISA allowance for 2015-16 (and 2016-17) and you then took £2,000 out, you wouldn’t be able to replace that money. That’s because you’d have paid the maximum amount into your ISA. However, under the flexible ISA rules, you’d be able to pay the £2,000 back into your ISA.

Flexible cash ISAs – who offers them?

Not all banks or building societies offer flexible cash ISAs. The rules say that banks don’t have to offer flexible cash ISAs. As I write this, only a number of banks do offer them. They include:

Coventry Building Society: it has an easy access flexible cash ISA. The rest of its ISAs are not flexible.  As I write this, it’s paying 1.1% interest.

Metro Bank: it has a flexible easy access cash ISA. It also has fixed rate cash ISAs that aren’t flexible. As I write this, it’s paying 0.75% interest.

Nationwide Building Society: all its cash ISAs are flexible cash ISAs, except for junior ISAs. You can read more about its cash ISA range on its website.

Skipton Building Society: has a flexible cash ISA. Money can be taken out and replaced without you needing to give notice. The only exception is that you can’t do this in the first 14 days of taking out a cash ISA online. There’s more information about easy access cash savings on Skipton building society’s website. As I write this, it’s paying 0.8% interest.

Virgin Money: its easy access cash ISA and easy access cash E-ISA are both flexible. You can take money out online. As I write this, both its ISAs are paying 0.75%.

Yorkshire Bank: it has a specific flexible cash ISA. Its other ISA products are not flexible. As I write this it’s paying 0.7% on balances up to £14,999 and 0.9% on balances above £15,000. However, this may change in the future.

Banks and building societies that don’t offer flexible cash ISAs

This list of the banks and building societies that do not offer cash ISAs is not exhaustive. I’ll add more as I find out what other banks and building societies are doing.

Teachers building society, Barnsley building society, Chelsea building society and N&P building society (these are all part of Yorkshire building society, which also does not offer flexible cash ISAs).

First Direct and NS&I also don’t offer flexible cash ISAs.

Related articles:

Video: How to transfer a cash ISA

Stocks and shares ISAs; understanding how they work

The basics of cash ISAs; making the most of tax-free savings

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