New transfer guidelines concerning ISA savings fund transfer rates recently went into effect in the UK.
Now that the guidelines are in place, the time it takes to transfer funds from one ISA to another has been slashed in half. The original timeline included 30 working days – now it is only 15.
Once a consumer puts in their request to their new building society or bank, the guidelines allow five business days to send the customer’s previous manager instructions. The previous manager is then granted an additional five business days to transfer the funds to the new banking institution.
Once the funds arrive, the consumer’s manager must credit the cash to the new ISA in three business days or less. The remaining two days were added in as an allowance for first-class postage from one manager to the other.
Additionally three leading personal and business bank account providers in the UK have recently pledged to provide savers with a sweetened deal on transfers. Bank of Scotland, Halifax, and Nationwide now offer to calculate payment rates on the day any given customer applies for an ISA transfer.
Previously customers would have to wait until the transfer completed before being able to take advantage of a higher rate. Halifax and Bank of Scotland, both which are part of Lloyds Banking Group, offer a tax-free rate of 2.8 per cent on their ISA. The bulk of that interest rate is comprised of a bonus rate that expires after the end of 12 months, leaving the offering with only 0.5 per cent.
Nationwide’s ISA offering includes a 2.8 per cent rate of return as well. Again after a 12 month period the ISA will lose about 1.05 per cent due to the expiration of its bonus rate.