Isa transfers: How to make your money work for you

News that inflation leapt again last month should have sent savers scurrying to check they are getting the best rates on their accounts. Even inside the Isa wrapper your savings now need to be earning at least 3.4% to beat CPI , so the chances are that unless you are locked into a competitive fixed rate several years ago, or have just taken advantage of one of the current best buys, your nest egg is effectively falling in value. So what should you do if your Isas are losing interest? The good news is that you can transfer money invested in a previous tax year to an account with a better rate, but there are certain rules you have to follow to make sure you don't accidently use up this year's allowance. Generally, the rules apply to stocks and shares Isas as well as cash Isas, however some providers may try to charge you for switching. The first thing you need to do is make sure you are not locked into your current Isa deal. Then you should start looking for an Isa that pays a better rate than your existing account and accepts transfers. Unfortunately, the accounts with the best rates on the market are often closed to transfers. Andrew Hagger from Moneynet says: "In the majority of cases, if it's a really good rate they don't allow transfers in." On financial information website Moneyfacts the best-buy cash Isas are split into two tables, one of which focusses on deals accepting transfers , so this is a good place to start your search. If you have seen a better rate advertised elsewhere, it is worth checking the small print to see if they accept transfers in, just in case you can apply. A few Isa providers seem to be targeting savers who have built up several years' money and want to transfer – Lloyds TSB, for example, is offering tiered interest rates on its two-year fixed-rate Isa , with the best payable on balances of £30,000 and above. However, those with this amount to put away may be the only savers interested: the tiered rates start at no interest at all for balances of less than £3,000 and peak at 3.3% for those with more than £30,000. When you have found an Isa you like you need to apply for it and – this is the key bit – ask the new provider and not your existing one to manage the transfer. You will need to provide details of the old account, including the account number. Do not withdraw the money yourself, because as soon as you do so it will be outside the Isa wrapper and count as new money if you try to pay it in to a new account. You can choose whether to move all of your savings or just part, except when it comes to money paid in during the current tax year. So if you stashed away £3,000 last year you do not have to move all of it. However, if you have paid £3,000 into an account since 6 April you must move all of it. This is so you do not end up with two Isas opened in the same year. If you have several years' of Isas with separate providers you can transfer as many of them as you like, either separately or into a single account. You cannot merge accounts into one opened in a previous year. So, if you have a Barclays Isa from last year, for example, and a Lloyds TSB Isa from the year before, you cannot move all of the money into the Barclays account. You can, however, decide to consolidate them in a Santander Isa, for example, but you will need to complete separate transfer forms for each one. Having moved them you can put this year's allowance in the same account, but bear in mind you may be able to get a better rate on an account that doesn't take transfers. The government has set a deadline of 30 days for transfers to be completed, but in practice some providers have taken much longer. Last month, Consumer Focus made a super complaint about transfer delays, saying its research showed that some savers were waiting longer than five weeks for a switch to complete. However, Hagger says savers should not lose out completely. "Providers will pay interest up to the date the old account is closed and the new account is opened, so you're not going to lose out in between," he says. What will happen is you will continue to be paid your existing, lower rate for longer than you hoped. Quick facts • You CAN transfer as many Isas from previous tax years as you like. • You CAN'T withdraw the money and pay it in yourself. • You CAN transfer everything, including interest, even if it is over the annual allowance. • You CAN'T transfer just part of the money you have invested in the current tax year. • You CAN transfer money held in a cash Isa to a stocks and shares Isa. • You CAN'T transfer money held in a stocks and shares Isa to a cash Isa.