Transferring Your Cash ISA
Cash ISA providers would prefer if you believed that once you open an account with them it’s a permanent thing. But, you have the right to transfer any cash ISA you currently have to another provider. The trick is to find one that will accept the transfer. But, why should you transfer an ISA?
The main benefit of transferring your ISA is to earn a higher cash ISA rate. Most providers will offer an initial rate that is very high, but after a set time that rate will revert to a much lower rate. By transferring your ISA you can continue to get the best cash ISA rates available.
However, your current provider may impose a penalty if you choose to transfer your savings. Some may only charge a penalty that is equal to 30 days of interest, but others may charge more. So, if you are considering doing a transfer you should find out exactly what it’s going to cost you.
While you might think you can avoid any transfer penalties by simply withdrawing the money and opening a new account, this is a big mistake. As soon as you withdraw all the funds from your ISA you will immediately lose all of the tax benefits that an ISA provides.