Halifax, part of the Lloyds Banking Group, has announced details of its cash Isa Promise, under which it will pay interest from day one of receiving a customer’s completed Isa transfer application form.
Halifax estimates that transfer delays cost cash Isa customers £24 million each year in lost interest. The Halifax Cash Isa Promise will take effect from 2 October 2010.
The key elements of the Isa Promise are:
- Halifax will pay interest from day one of receiving a customer’s completed ISA transfer application form.
- Halifax cash ISA accounts are available to both new and existing customers.
- Halifax cash ISA interest rates will be clearly displayed on Cash ISA statements.
- From July 2011, interest rates will be prominently displayed online, in branch or over the telephone.
- Halifax cash ISA customers will also receive advance notice if any initial reward or fixed rate is due to end.
Office of Fair Trading investigation into Isa transfers
An investigation by the Office of Fair Trading (OFT) into the cash Isa market earlier this year found that switching a cash Isa takes 26 calendar days on average. 25% of transfers take longer than 30 calendar days. During this period, customers switching their cash ISA to a better rate currently earn the lower rate paid by their existing provider.
The OFT also found that there can be a gap of up to five days during which interest is not accrued when consumers transfer their cash Isa.
Get the best cash Isa
The Halifax Cash Isa Promise is designed to make sure consumers aren’t penalised when they switch to a better deal. As it is available to existing customers as well, it also makes it easier for Halifax’s current customers to switch to a better deal with the bank.
Last week, Halifax launched the market-leading Cash Isa Direct Reward paying 2.8% AER (variable) for 12 months. For customers who hold their main current account with Halifax, the Isa Direct Reward interest rate increases to 3% AER (variable) for 12 months.
To compare the new Halifax cash Isa deal with the rest of the market, read our Which? cash Isa reviews. To decide if a cash Isa is best for your needs, read our guide .
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