Thousands of savers have money in fixed rate ISAs, or ISAs which they took out because they came with a tempting initial bonus attached. However, once the fixed rate or bonus period ends, your rate is likely to plummet unless you move your money elsewhere.
This tax year, which ends on April 5, you can invest up to £5,760 into a cash ISA. If your ISA returns aren't as high as you'd like, then you can transfer your money to a different account, even if it's the still the same tax year in which you opened your account.
If you're worried about moving because haven't used your allowance in full this year, then don't be, as once you've transferred you should be able to save the rest of your allowance with your new provider.
Transferring your ISA cash to a new account needn't be complicated or time-consuming. There are industry guidelines in place that providers must follow to ensure transfers are made quickly and smoothly. Here's our guide to how you can transfer to a better ISA deal in five easy steps...
1) DON'T withdraw your ISA cash
If you want to transfer your ISA money elsewhere, it might seem obvious that the first thing you need to do is to withdraw your cash from your existing provider. However, don't do this under any circumstances, or you'll automatically lose your ISA's tax-free benefits.
Instead, you will need to ask your new provider for a transfer form, and it will arrange to move your money across on your behalf. You will only be able to move your ISA cash to an account which accepts transfers, as not all of them do. 2) Find the best ISA deals
It always pays to do plenty of research before
picking a cash ISA, so that you can find the best possible returns. You'll need to decide whether or not to go for a fixed or variable ISA too. If you opt for a fixed rate account, then your returns are guaranteed not to change for a set period of time. However, you usually won't be able to make withdrawals during this time, so you must be certain you won't need to get your hands on your cash suddenly. Halifax is among the providers which offers fixed rate ISAs that accept transfers. Its five-year ISA Saver Fixed account pays an annual equivalent rate (AER) of 2.10% and can be opened with a minimum investment of £500. You cannot make withdrawals or additional deposits during the account term, but you can close the account early, although if you do this you will lose 365 days' tax-free interest. Leeds Building Society's 5 Year Fixed Rate ISA Issue 3, however, pays 3.05% tax-free, and can be opened with a minimum investment of £1. If you don't want to tie your money up for this long, Halifax also offers shorter fixed term ISAs, with its two-year and three-year accounts, for example, paying 1.65% and 1.85% tax-free respectively. Other competitive shorter-term accounts which accept transfers include Britannia Building Society's one and two-year accounts, which pay 1.85% and 2.05% respectively, provided you've got at least £5,760 to invest. Savers who want to be able to access their money at any time should opt instead for an easy access variable ISA. Nationwide Building Society's Web ISA Issue 5 offers unlimited withdrawals and pays 1.50% tax-free (on balances of over £1,000). Bear in mind, however, that this rate includes a fixed bonus of 1.00% until the end of January 2015, so you'll need to move your money again at the end of this period. The RBS and NatWest variable rate Instant Access Cash ISA accounts also both accept transfers, but you'll need a hefty £25,000 in cash ISA savings if you want to open either of these accounts and earn up to 1.50% AER tax-free. Interest rates are tiered, so you'll earn a lower rate of interest on balances below £25,000. If you're prepared to give notice before you make a withdrawal, then the market-leading variable rate cash ISA which accepts transfers is Kent Reliance Building Society's 60 Day Notice ISA Issue 6, which pays 1.80% tax-free on a minimum investment of £1,000. 3) Get in touch with the ISA provider you want to switch to
When you've chosen the ISA you want to switch to, contact the provider and ask for a transfer form. You may also be given an application form for the new ISA you are moving to. Remember that when you complete the ISA transfer form, you'll need details of your existing ISA, including your account number and the name of the provider.
4) Wait while the switch is arranged
Once you've sent off your ISA form, you'll have to wait up to 15 days for the transfer to complete. Some ISA providers, including Nationwide and Halifax, will start paying you interest as soon as they receive your application.
If the transfer takes longer than 15 days to complete, then the provider you are moving from must compensate you for the delay by paying you the interest you would have earned from your new ISA if the transfer had been made on time. 5) What to do when your new account is open
Your new account may be up and running, but, before you sit back and relax, make a note of any important dates, for example, when any bonus rate might expire, so that you know to review your ISA rate then.
Remember too to make the most of your ISA allowance every year. Once the new tax year begins, you'll have a whole new allowance of £5,940 to use, so pay in as much as you can to maximise your tax-free returns.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
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