Abbey: look for cash ISAs allowing transfers

Customers switching to Abbey’s Direct ISA would be £67.50 better off on average transfer amount.

Prospective savers should consider other options carefully before taking up a new cash ISA offer, according to Abbey, as some ISAs do not allow investors to transfer existing cash ISA balances.

Research has shown that the average transfer amount into cash ISAs is currently £12,000, and that two-thirds of those who used their ISA allowance in 2005/ 2006 intend to do the same in 2006/ 2007.

On this basis, customers transferring £12,000 would be as much as £67.50 better off transferring to Abbey’s Direct ISA than investing in, for example, the Barclays Cash ISA.

Reza Attar-Zadeh, Head of Savings and Investments at Abbey, said: “ISAs with a maximum limit are unlikely to be the best deal for most ISA switchers. Indeed, many headline ISAs do not allow transfers in. In most cases, the majority of Cash ISA investors - who invest year after year -would be better off opting for an account that allows them to transfer their existing cash ISA money.”

Abbey’s Direct ISA account pays 5.50% tax free/AER on balances from £1. The account offers a market-leading rate of 5.75% tax free/AER for balances over £9,000.

The ISA is available to both new and existing customers and offers a cash card to help people who intend to make occasional withdrawals. The account offers customers instant access to funds through post, telephone, ATM or online. The minimum opening balance is £1 and transfers can be made into the account from other ISAs.