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Ask Rachel
Working in the financial industry for over 30 years, Rachel Thrussell is the leading independent expert on UK savings products. Her views are constantly in demand from both the industry and the press.
If I want to transfer my ISA, do I just tell my existing provider where I want it to go? And how long is it likely to take?
To get started, you actually need to contact the provider you want to transfer to. They will then ask you to complete some forms, but should then take control of the transfer process from there. As to how long it will take, HMRC says that cash ISA to cash ISA transfers must be completed within 15 business days of the instruction being received by the new ISA provider. If, for whatever reason, it isn’t completed within this time, you would be entitled to ask for a refund of lost interest. It is possible to transfer between cash and stocks & shares ISAs, including funds from previous tax years. However, when searching for a new ISA, it should be noted that not all providers accept transfers in, and not all will accept transfers in from stocks & shares ISAs.
This week's
average rates
| No Notice | 0.24% |
| Notice | 0.57% |
| Cash ISA | 0.61% |
| 1 Year Fixed Rate Bond | 0.75% |
| 2 Year Fixed Rate Bond | 0.82% |
| 3 Year Fixed Rate Bond | 0.97% |
| 4 Year Fixed Rate Bond | 1.07% |
| 5 Year Fixed Rate Bond | 1.13% |
| 22 September 2020 | |
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Long-term savers urged to be cautious despite inflation falling to 0.2%
The Consumer Price Index (CPI) figures released last week showed that during August inflation fell to a five-year low of 0.2%. Although this will be welcome news to many savers, especially as savings rates have seen a slight increase over the last few weeks, long-term savers still need to be cautious and may look to alternatives to savings accounts for getting better returns on their investments.
During 2020, the inflation rate has remained low, mainly impacted by consumer spending habits changing drastically due to lockdowns implemented to help reduce the spread of Covid-19. However, while inflation has remained low this year so far, the predicted rate of inflation for July to September 2023 is 2.2%, which if the prediction is met, would mean those locking into a five-year fixed rate bond today will have an under-inflation rate for the final two years of the account’s term.
Currently, the highest rate on a long-term fixed rate bond is Bank of London and The Middle East’s five and seven-year fixed rate bonds, which both pay an expected profit rate of 1.60% gross on anniversary.
This means that savers looking to put their money away for the long-term, may want to consider choosing a short-term account, for example a one or two-year fixed rate bond, which will enable them to withdraw their money after a shorter period and, if rates have increased, lock into a higher-paying account.
Savers wanting to put their money into a secure account can instead consider premium bonds. Although premium bonds do not offer interest on money invested, savers are instead entered into a prize draw each month that can see them winning between £25 to £1 million. There are no guarantees that premium bond holders will win money, but the more premium bonds held the higher the chances of winning. At the moment, premium bonds have a prize fund rate of 1.40% tax-free, but from November (impacting the December prize draw), this is set to be reduced to 1.00% tax-free.
Alternatively, savers willing to consider a risker investment, could choose a stocks and shares ISA instead. Investing in a stocks and shares ISA does carry the risk of losing all money invested, including the initial capital, but can result in greater returns on investments. Investing in a stocks and shares ISA should usually only be considered by those looking for a long-term investment of five years or more. In addition to this, those looking to invest in a stocks and shares ISA should be clear of the risks involved with this type of investment. For those new to investing, using an investment platform can be a good option as these platforms will normally allow investors to diversify their investments easily and can be set up with a small initial deposit and low minimum monthly deposits.
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