Savvy Money: Ensure you make the most of your old and new ISAs

There is just over a month to go until the end of the tax year, which normally means: A) lots of ISA (individual savings accounts) adverts; and b) a bunfight by cash ISA providers for the top slot in the best-buy tables.

It's always worth getting the best rate on a new cash ISA, but you shouldn't forget about money you've already saved in old ISA accounts.

Existing ISA savings

If you'd saved the maximum since ISAs were launched in 1999 you could have around £50,000 by now. Even if you have rather less, it's still worth checking the rate and moving the money if you can do better elsewhere – you can transfer money in an existing ISA without it affecting your ISA allowance.

Transfer rules

I get lots of emails about cash ISA transfer rules and, while they're not fiendishly complicated, they're not exactly simple either. If you get them wrong, you could find your savings lose their tax-free status. The most important thing to remember is that you mustn't close down your cash ISA account if you want to transfer it. Instead, you should contact the bank/building society that you want to switch your cash ISA to and ask them to do the transfer (you'll have to fill in a transfer form).

Your money should be switched to your new ISA provider within 15 working days, although some pay interest as soon as they've received your application.

Transfer limits

The rules say that if you have money saved in cash ISAs from previous tax years, you can transfer some or all of it (plus interest), but if you're moving your cash ISA from the current tax year you have to transfer the lot. And you can transfer a cash ISA into a stocks and shares ISA but you can't do the transfer the other way. Did I say it wasn't fiendishly complicated?

Best buy rates

New cash ISAs are likely to be launched in coming weeks so keep an eye on rates. At the moment – annoyingly – some of the cash ISAs paying the highest rates won't accept transfers in. Of those that do, the Cheshire Building Society's easy access ISA Saver pays 2.5 per cent on balances of £1,000 or more (online or phone account). But there's a chunky bonus of 2 per cent until 31 July 2014 so you'd want to move it then.

Barclays has an easy access Instant Cash ISA paying 2.3 per cent on balances of £30,000 or more. There's a one-year bonus of 0.8 per cent and lower tiered interest rates on lower balances. You can access it in a branch, or by phone or online if you have a Barclays current account.

It's a fraction ahead of RBS/NatWest's e-ISAs which pay 2.25 per cent on balances of £30,000 or more (the rate reduced from 2.5 per cent on Friday). If you transfer in less than this, you'll get a lower rate.

Also paying 2.25 per cent is Harpenden Building Society's Simply ISA and Nationwide's Web ISA, although with Nationwide's you will need at least £10,000 to get this rate, and the rate falls to 0.5 per cent in August 2014.

This probably isn't the time to lock your money away, but if you need every penny of interest, you can earn 2.55 per cent with Nationwide's 30-month fixed rate ISA and 2.5 per cent with Halifax's two-year ISA.

Verdict

It's well worth checking the interest rate on your existing ISAs and transferring to get a higher return. Cash ISA providers have a nasty habit of dropping interest rates dramatically on existing products after the first year or so, and some pay as little as 0.1 per cent.

Savvywoman.co.uk

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