By
Lee Boyce
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Lockout: Some top cash Isas don’t accept transfers in from other providers
A lack of competition between banks has left savers with few attractive options as the end of the tax-year approaches – but the options for their previous years’ Isa savings are even worse.
This is Money research shows the five best deals for transferring in tax-free money have fallen sharply in the last 12 months.
The Isa season is the period before and after the new tax year, which starts on 6 April.
Traditionally, providers would clamber over each other to offer best-buy deals to tempt savers as they look for the best home for their existing savings, and the best rate on offer for the coming year.
It’s big business. In three months last year – March to
May – nearly £3.5billion poured into cash Isas.
In total, £226billion is held in tax-free accounts.
But savers who put their money away in previous years in accounts with fixed rates for a period are now facing up to far lower returns when they look to re-home their cash – and may find they are better off leaving it where it is.
Last year for example, Santander and its Direct Isa Saver 4 offered an easy-access option with a 2.5 per cent rate available for transfers in.
It came with a 0.5 per cent bonus which will expire this year and bring the rate down to two per cent. But despite this rate drop, it will still beat the current crop of poor easy-access deals.
Cheshire Building Society also offered a 2.3 per cent instant-access that allowed transfers. This came with a 1.8 per cent bonus until 31 October 2014, falling to 0.5 per cent after that. Until then this remains a far better deal than the current crop.
The best savers can get on an easy-access cash Isa that accepts previous years’ money is 1.75 per cent. But they won’t even get this without jumping through hoops.
This is offered by Nationwide and requires you to be a current account customer with the building society.
The next best is 1.65 per cent from Metro Bank, although you will need to visit one of its branches. These are only located in London and the South East.
From Monday, Santander will boost the rate on its Direct Isa from one per cent to 1.6 per cent – and this allows transfers in.
And even fixed-rate alternatives offer rates not much better for transfers. Last year you could have got 3 per cent on your transferred-in cash for three years with Halifax.
To get three per cent now, you’d have to transfer to a five-year fix with Skipton Building Society. The next best five-year rate is 2.5 per cent.
Santander last week launched a best buy rate of 2.3 per cent of those willing to fix for two years. But this is only available to its 123 current account and 123 credit card customers – and it’s lower than the easy-access rate it offered last year which was open to everyone.
Despite low cash Isa rates its important to build for future
Everyone can save up to £5,760 in cash into an Isa this tax year, which ends on 5 April 2014. They then get a new allowance for 2014 to 2015, of £5,940.
It is possible to move money you hold from previous years into a new account if you find a better deal – but the receiving account provider has to specifically allow transfers in.
Savers need to be aware that they must not simply withdraw money from a previous year’s Isa and then put it into today’s current best deals – they will lose their tax-efficient status and the money will count against their current year’s allowance.
Isa transfers need to be completed with the correct paperwork to ensure tax-free status is maintained.
CASH ISA DEALS OF THE WEEK
Accepts transfers
nbspTop 2% tax-free rate
Free vouchers up to £20
nbsp 5-year fix 3%
Comments (3)
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Perry,
Warrington,
59 minutes ago
Any Cash ISA is never going to keep up with inflation. If you are not prepared to invest in long term equities, property, bonds etc then you may as well get it spent and enjoy it as by keeping it in cash you are losing money hand over fist.
Wayne L.,
West Sussex.,
2 hours ago
Why would they when they have this great new system. Get funny money, digits on a screen at 0.5%, lend it out for overpriced boxes or even better on credit cards at 15.0%+. What can possibly go wrong.
Antonio Tomasso,
Glasgow, United Kingdom,
4 hours ago
The banks don’t actually want our money period. Or should I say they do but they don’t want to give you any interest.
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Best buy cash Isa transfer rates plummet in a year
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