# Cash ISA Advice (Finance noob alert)



## Mouse (Oct 31, 2006)

I posted this on Pistonheads too to see if I could get more feedback 

Right I guess you could call me a bit stupid as I appear to have taken out a cash ISA with no idea how it really works. Long story as follows...

I started mine late in around August last year (Cash ISA with Santander, 3.3% rate, usual bank is Lloyds). To date I've saved £4,747.11 of my £5,340 allowance for the 2011 - 2012 tax year. I've arranged for the last payment of £592.89 to be extracted from my Lloyds account on 1st April, which will give me the total allowance before the new tax year starts on 6th April. I was paid £37.02 interest in the beginning of March, but I've obviously not finished paying into it. So here are all my questions:

1) As interest has been paid for all my contributions up to March, will I get a final interest payment when I submit the final £592.89?

2) How soon would I have to wait to gain this interest as due to Santander offering lower rates for the 2012 - 2013 tax year I will need to shop around?

3) How soon do I need to let Santander know I won't be continuing the account into the new tax year?

4) Once I have all the money from the ISA including the interest earned, can I transfer this into the new ISA account I choose?

5) If yes, does this amount also earn tax free interest based on top of the £5,640 I'll be saving for the new tax year, or is it purely the £5,640 that will earn tax free interest and I'm better sticking last years savings in my Lloyds account?

6) Who is offering best rates for a 1 year cash ISA for the 2012 - 2013 tax year?

Apologies if some of these questions seem really stupid!

Thanks in advance.


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## Tricky Red (Mar 3, 2007)

In answer to your questions. 

1. Interest accrues on a daily basis. The ISA does not have a finish date. 
2. As above. The rate will probably change at a given point of time, possibly not yet determined. 
3. You don't need to. 
4. Yes, if the new account allows transfers in. Some don't. 
5. Tax years are independent. All interest accrued is tax free. You cannot overpay into an ISA in a tax year. They don't allow it. 
6. Santander seem to offer 3.3%.

You could open a new one each year or just add to an existing ISA. Just follow the best deal and you should be ok.


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## SteveyG (Apr 1, 2007)

6. Barclays were offering 3.6% when I last logged in.


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## justina3 (Jan 11, 2008)

thats a shocking return amazed people still use these


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## R7KY D (Feb 16, 2010)

I've withdrawn all my ISA money out and going to have a year on the premium bonds


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## Ravinder (Jul 24, 2009)

1. (and 2). Yes, you normally get interest credited on two different occassions as far as I am aware. Usually when the tax year is approaching or finishes and on the anniversary of the account so in your case, in August. That is when the difference will be paid.

3. If you finish your ISA early you will only get interest paid up until the date you keep it. Although the ISA has no "end date" the maturity date will be in August when you opened the account so you will get 3% up until that date. After it matures, the interest rate will drop to the standard variable rate which is currently around 0.5%.

4. You can contact Santander and let them know at any time as your ISA is not fixed so you can access your funds/close the account at any time. However, if you are looking to switch to another provider then the other bank you wish to move to usually offer an ISA switching service so you don't have to contact Santander to do anything. So if you're going with Barclays, or whoever, you can say to them I wish to transfer my ISA from Santander to yourselves and they will take care of this for you. The downside to this is that a lot of the bank that switch your ISAs only start paying you interest when the transfer process has been fully complete and in some cases it can take a few weeks so you could be losing out on a bit of interest in that period. I know Halifax now give customers interest from the time that they agree to switch and not from when it is completed so they are better this way. Maybe other banks will follow suit.

5. You will earn interest on the balance you have transferred across plus any extra that you put across into the new tax year. Obviously your transfer is not included as new investment. So you can transfer your £5340 and then from 6th April put up to another £5640 and you will get interest on the full balance you have. (I think that is what you mean anyway).

6. Have a look on Moneysupermarket.com

http://www.moneysupermarket.com/savings/easy-access-accounts/

http://www.moneysupermarket.com/savings/cash-isas/

Just from my understanding. I work for a bank. I'm not a savings specialist but have a little knowledge.


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## Mouse (Oct 31, 2006)

Ravinder said:


> 1. (and 2). Yes, you normally get interest credited on two different occassions as far as I am aware. Usually when the tax year is approaching or finishes and on the anniversary of the account so in your case, in August. That is when the difference will be paid.
> 
> 3. If you finish your ISA early you will only get interest paid up until the date you keep it. Although the ISA has no "end date" the maturity date will be in August when you opened the account so you will get 3% up until that date. After it matures, the interest rate will drop to the standard variable rate which is currently around 0.5%.
> 
> ...


Cheers, have a slightly better understanding now!

I made my last payment in today and no more payments to arrange so I'm guessing I'm ok to leave the money sitting until the end of the month when I get paid again and have opened a new account for the 2012-2013 tax year?


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## Ravinder (Jul 24, 2009)

Yes, that will be fine.


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## SteveyG (Apr 1, 2007)

Mouse said:


> Cheers, have a slightly better understanding now!
> 
> I made my last payment in today and no more payments to arrange so I'm guessing I'm ok to leave the money sitting until the end of the month when I get paid again and have opened a new account for the 2012-2013 tax year?


Or continue paying into the same account in the new tax year if you are happy with your current interest rate.


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