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ISA savings can be moved between providers to take advantage of better interest rates and other features. However, while all providers must allow savers to move their savings out of their accounts, receiving providers are under no obligation to accept those same funds.
If a saver wishes to transfer the funds out of an ISA and move them to a new provider, the existing provider must allow them to do so.
However, before this is done the saver should make sure that the new provider actually accepts ISA transfers in.
Additionally, providers may charge a penalty for transferring and this should also be checked on.
ISAs from previous tax years can be transferred and split but the savings limit cannot be topped.
In the current tax year, the maximum that can be saved into ISAs is £20,000.
This can be split into the four main types of ISA which includes:
- Cash ISAs
- Stocks and shares ISAs
- Innovative finance ISAs and
- Lifetime ISAs
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Each type of ISA has differing rules on who can open an account which is usually based on age and location.
However, savers have a wide range of options when it comes to where they can deposit their assets.
ISAs can be opened with:
- building societies
- credit unions
- friendly societies
- stock brokers
- peer-to-peer lending services
- crowdfunding companies and
- other financial institutions
Savers can withdraw money from their ISAs at any time without losing any tax benefits.
There may still be charges for making withdrawals and Lifetime ISAs will impose penalties for withdrawals if they’re not done to fund retirement or a home purchase.
Some ISAs may also be “flexible”, which means that cash can be taken out of them and put back into the account without reducing allowance rates.
The providers should inform their customers if their account is flexible or not.
Savings held in ISAs are safe and protected but, just as with most savings accounts at the moment, interest rates are likely to be low.
Savers across the UK are generally struggling at the moment as the economy has forced the Bank of England to keep the base rate low, which has a corresponding effect on retail financial firms.
The Bank of England recently decided to keep the base rate at 0.1 percent.
The next decision on this will occur in September and they have detailed that negative rates are not off the table.
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