Emma Wall: Hello and welcome to the Morningstar series 'Ask the Expert'. I'm Emma Wall and to talk about cash New ISAs I have Anna Bowes of Savings Champion. Hello Anna.
Anna Bowes: Hello.
Wall: So we can now top-up our ISAs and take out New ISAs to the tune of £15,000.
Bowes: That’s right.
Wall: Fantastic news for savers.
Bowes: A significant increase. It was just under £6,000 before, but now we are able to put up £15,000 in and the other big change is that you could actually transfer, if you got a stocks and shares ISA and you want it to be in cash you can now move all of that into cash ISA, when you can find the best rates.
Wall: So I've already got an ISA. What are the options available to me?
Bowes: If you've already opened a cash ISA in the current tax year you've only been able to put the standard cash ISA allowance in to now. But now you are able to top up to £15,000 if you want to. So there are varying different types of ISAs that you may have opened up, so you need to keep an eye out for that.
If there is easy access generally variable rate ISAs there is a couple of things to live for. You'll probably be able to top them up quite easily. But you also need to keep an eye on the rates of interest and switch them if they become uncompetitive. But a key issue is the changes to fixed rate ISAs for this current tax year and because the NISAs have been introduced.
Wall: In the past fixed rate ISAs you had a chance to put some money at the start and that was it, you weren’t allowed to touch it until it matured.
Bowes: In the majority of cases that’s right. So if you only had £1,000 and you wanted top up your ISA allowance later on in the year, you probably find you were stuck because you couldn’t move your fixed rate ISA because obviously there'd be a penalty if you did that. So you really be stuck not being able to maximise. But the good news is that all the providers have reacted to the change and the NISA rules coming in. So they've all changed the terms and conditions so that from the July , you can now top up to the maximum £15,000.
But the key thing is whilst they've all changed their terms and conditions they are all different. So you need to check, if you've already opened a fixed rate ISA earlier in the year. You need to now check what your deadline is for topping up.
Wall: It's very variable as you say, I mean how short is the shortest window?
Bowes: Well the shortest one is with NatWest RBS and if you opened up a fixed rate ISA with them right at the beginning of the tax year you've got until the July 18. So you really need to check whether you are in that issue of their fixed rate ISA. The rest of them they could be the whole of July, they can be up to September. They can be up to the end of the tax year. Some of them you'll have to open with the current fixed rate issue that’s available now, but you can top up at this point. So there is a real big variety and you need to be very vigilant to make sure you don’t miss that opportunity to top-up.
Wall: It's very much a case of checking with your provider, give them a call, go into the branch and check what applies to you.
Bowes: That’s right and if you haven't quite got the funds available yet and it's something that you can do further on down the year. Make sure you diarise that so that you don’t forget about it.
Wall: Let's have a quick chat about rates then. We had a chat after Budget when everybody was very positive about the concept of being able to go from £6,000 to £15,000 in a cash ISA and you were one of the people who warned although this is great news, it doesn’t necessarily mean rates are going to jump.
Bowes: I think that’s proven unfortunately to be slightly correct. There have been over 90 rate cuts to existing variable rate ISA, since the Budget. So even though it's a budget for savers et cetera it's been a bit disappointing that lot of providers have reacted negatively and that’s partly to do with, well, mainly to do in my opinion of the funding for lending scheme. Which meant that banks precisely just don’t want your money?
Don’t want our money and so as a result they are not falling over themselves to produce better rates across the board especially not with ISAs. We didn’t have a good ISA season and now the NISA season is proving to be a little bit of an anti-climax. So it's a couple of rates that have been going up. But on the whole we've seen a lot more cuts than we have rises.
Wall: So what are we waiting for then, are we waiting for Mark Carney to raise the Bank of England base rate?
Bowes: It would be nice if we could see a direct correlation to that for savers. Because obviously we'd like to see Bank of England base rate rising and everybody's interest rates on all of their savings accounts going up in the same line. I think it would be a bit naive of us to expect that. Especially if we look at rates are being cut now then even if they do go up by the same amount you probably end up being in the same position.
So for savers that story is the same I am afraid you have to stay vigilant. You have to keep on top of those variable rates and if they are no longer capacitated you need to look to switch.
Wall: Anna, thank you very much.
Bowes: Thank you.
Wall: This is Emma Wall from Morningstar. Thank you for watching.
