Switching a cash ISA takes an average of 26 days according to the Office of Fair Trading (OFT) and currently savers earn the lower interest rate during this time but Halifax are about to offer a fairer ISA transfer deal.
Halifax estimates that transfer delays cost cash ISA customers £24 million each year in lost interest.
With the average cash ISA transfer taking 26 days, some 25% take longer than 30 calendar days and during this time, customers switching their cash ISA to a better rate currently earn the lower rate paid by their existing provider.
The Halifax Cash ISA Promise, which takes effect from the 2nd October, addresses the key issues customers face during the lifetime of their cash ISA.
Firstly, all customers switching their existing cash ISA to Halifax will earn interest from the first day their completed application form is received either in branch or by post.
The Promise also includes a clear commitment that cash ISA accounts will be available to new and existing customers.
Last week, Halifax launched the market leading cash ISA Direct Reward paying 2.80 per cent AER/Tax Free (variable) for 12 months. For customers who hold their main current account with Halifax the ISA Direct Reward interest rate increases to 3.00 per cent AER/Tax Free (variable) for 12 months.
The transparency of customer interest rates will also be improved. From July 2011, interest rates will be prominently displayed on customers’ savings statements as well as online.
Their cash ISA customers will also receive advance notice if any initial reward or fixed rate is due to end. At this point, they will be invited to review the savings deals available for them either over the telephone or with a branch based adviser.
Russell Galley, Managing Director of Savings, commented “The cash ISA is a great, tax efficient, way to save and is at the heart of many families’ approach to building a nest-egg.”
This Cash ISA Promise is an industry leading move to help drive a fairer deal for customers when transferring their cash ISA.