How to transfer a cash ISA

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Category: ISAs
Author: Tim Leonard
Updated: 25/01/2019

At a glance:

• Cash ISAs allow you to grow your savings pot entirely tax-free, but like with traditional savings accounts, some pay more than others.
• If you find a cash ISA that pays more, you can transfer to a new account, though make sure to check the terms of the account and be aware of potential penalties.
• If you do want to transfer to a new deal, DO NOT withdraw the money yourself – there's a set transfer process that needs to be followed to ensure your pot retains its tax-efficiency.

Cash ISAs can be a great way to grow your savings tax-free, no matter what tax band you're in.

But, simply because an account is an ISA, it doesn't necessarily mean that you're getting a good interest rate.

Particularly on older accounts, you may well find that the rate you're getting could have dwindled – in some instances considerably.

Why transfer a cash ISA?

There are a couple of good reasons why you'd do a cash ISA transfer:

• To get a better rate
• To bring your money together so it's easier to manage

All cash ISAs have to allow you to transfer your money to another provider. However, there may be a penalty for transferring out - particularly on fixed rate ISAs - and not all providers will let you transfer in previous ISA pots.

Before transferring, be sure to weigh up whether you'll earn more interest by moving (and paying the penalty), or by staying put.

How to transfer a cash ISA

1. Research the best cash ISAs that allow transfers in (not all do). Our Best Buys are a good place to start, with our ISA savings search allowing you to have a more detailed look at what's available.
2. Open the new ISA.
3. Complete a short ISA transfer form with the new bank or building society.
4. Your new and your old ISA providers will arrange for the ISA to be transferred. The transfer process should take no longer than 15 working days.

Once you have completed the transfer form, you don't need to do a thing. Some ISA providers will pay you interest on the money you wish to transfer from day one.

If the transfer does take longer than 15 working days, your old ISA provider must compensate you by paying the interest rate offered by the new ISA.

Do not close your existing ISA or withdraw the money. You must follow the specific ISA transfer process.

The small print of ISA transfers

• Not all cash ISAs allow you to transfer in. Although ISA providers are required to let you transfer out, it is not a requirement to allow transfers in.
• You're now able to transfer between cash and stocks & shares ISAs however you see fit, but again make sure to check that your new ISA provider will allow transfers from stocks & shares savings.
• ISA transfers in will probably need to be 'new money' to the bank or building society to be accepted. Some banks and building societies will not let you transfer to another ISA in their range – it will only allow transfers in from money you have saved with another provider.
• You can only have one active cash ISA per tax year (6 April to the following 5 April), but you'll be able to transfer ISAs as often as you wish – as long as you follow the correct process.

What Next?

Check out the fixed rate ISA best buys

Compare variable rate cash ISAs

Find all the best cash ISAs with Moneyfacts.co.uk's whole of market savings search