In this brief guide, we are going to be discussing the Metro bank ISA.

In this post, we are going to introduce you to the world of the Metro bank ISAs, their best use case and all you need to know about the specific ISAs.e.g which one can help you get on the property ladder or help you save for retirement.

What is the Metro bank ISA?

The  Metro bank ISA(Individual savings account) is a tax-effective way to save. ISAs allow you to pay no tax or the minimum tax on the interest you make on your savings.

To be eligible for an ISA you will usually have to be:

  • You must be at least 16 years old
  • You must be a UK resident
  • And you must have not subscribed to another UK ISA in the same category in the same tax year

So, you are probably wondering what does “subscribing to an ISA” mean. Subscribing to an ISA means paying into and opening an ISA. You are allowed to subscribe to one of each type of ISA every tax year and you must not exceed your ISA allowance each tax year.

How Many ISAs Can I have?💶🙌🏻

The current tax rules allow you to have or open one of each type of ISA every year but you can only put the maximum tax year ISA allowance in all of these ISAs. This means your combined savings in all your ISA accounts must not exceed your current tax year ISA allowance for the current year. The tax year ISA allowance is currently £20,000.

Can I open a cash ISA AND A LISA in the same year?

Yes, you can open a cash ISA and a LISA in the same year. You can also contribute to a cash ISA and LISA in the same year as long as you don’t go over your personal ISA allowance. You can out whatever you have left in other ISA accounts in the same tax year.

How many Metro bank ISAs can you open in one year?🔔❄

You can have multiple Metro bank ISAs but not more than one of the same( e.g you can’t have two Metro bank cash ISAs)   and your total Tax year ISA allowance must not be exceeded in your combined ISA contributions. This means ISAs you hold with Metro bank and ISAs you hold with other providers. Each ISA may also have its maximum contribution limit as well. So check the terms.

What to do if you open more than one type of Metro bank ISA?😮ℹ

Although it is very unlikely, if you mistakenly open more than one lifetime or stocks & shares ISA in a single tax year, you should notify your Metro bank ISA manager at the earliest opportunity. In some cases, the ISA may be allowed to remain open, once you have consulted with HM Revenue and Customs.

The rules for stocks and shares ISAs are the same as with cash ISAs. You can only pay into one each tax year but can open a new ISA with a different platform each year if you wish to. This means you may be able to further diversify by having one type of Metro bank ISA and opening the same type of ISA with a different provider in the next tax year. Contribution rules will still apply.

If you have multiple stocks and shares Isas open, you are only allowed to pay into one of them in each tax year. So, if you only wanted to invest a portion of your Isa allowance via the second Isa provider, this could be difficult as it will mean you are not able to add any new money to the original Isa in the same tax year.

The only other option to consider is transferring your existing portfolio to the other provider, although this might incur some costs.

How do ISA transfers work?🌟✈

ISAs are tax-free saving wrappers and moving them to get a better deal is common. If you move your ISA in the wrong way you could just end up losing your tax-free status and costing you interest made from your ISA. If you want to move your ISA to a Metro bank ISA you should contact the Metro bank ISA manager.

Why should you transfer your ISA?🌈ℹ

You could transfer your ISA for a variety of reasons such as getting a better rate or because of reasons such as the cost of your current ISA manager or their performance.

You might also be transferring all your ISAs to a new manager to have all your savings in one place or rather move all your savings to different places in a scenario where your combined savings are over the financial services compensation scheme limit of £85,000 per account.

There are a variety of ISA providers out there and you can view their various offerings, including the way they invest, their past returns etc all online so you have an idea of which provider you want to move your money to.

To transfer an ISA you simply open a new ISA account(in this case a Metro bank ISA ) then fill an ISA transfer form and send to your old ISA manager. It’s that simple. Once the transfer is done you will get a closure statement showing exactly how much you have transferred.

Be sure to be on the lookout for any charges or transfer out fees imposed by your current ISA manager.

Metro bank ISA

How long does your ISA transfer take?👀

This depends on what ISAs you are transferring. If you are transferring a cash ISA then this should take 15 days. If you are transferring a stock and shares ISA then this will usually take 30 days.

If your ISA transfer takes too long you can report it to the Financial ombudsman.

Which ISAs can you transfer?❄⌛

You can transfer any ISA although there might be some penalty for ISAs which are fixed-term or notice ISAs. Some ISA providers do not accept ISA transfers.

If you have a notice ISA, it is probably best to give notice to your current ISA provider to avoid any charges.

If you choose to proceed without giving notice then you should compare how much interest the new ISA will earn you and the cost of the penalty. If you still make more money by transferring your ISA then, by all means, transfer your ISA if you wish.

The Metro bank ISA is covered by the financial services compensation scheme. This means you are covered by up to £85,000 per account in case anything goes wrong with your Metro bank ISA.

Metro bank ISA

Types of Metro Bank ISA

Metro bank has two ISA products, they are:

The Metro Bank instant access cash ISA

And the Metro Bank fixed rate cash ISA

The Metro Bank instant access cash ISA

The Metro bank instant access cash ISA allows you to save up to £20,000 a year in it. You can also transfer funds from another ISA.

The metro bank instant access cash ISA charges an interest rate of 0.90% AER* variable and this interest is calculated daily and paid annually on or around the 5th April each year. The interest is paid tax free and is free from UK income tax and capital gains tax.

As the interest rate is a variable rate, this means that Metro bank can change it at any time but they will provide you with written notice if this change is not in your benefit.

This will be a 14 day notice if the change is in response to a Bank of England rate change and and two months if the interest rate change is for any other reason.

Metro bank ISA

What you need to know about the Metro bank instant access cash ISA

  • “You can apply for the Metro bank instant cash ISA if you are 16 years or older and are a UK resident. You will need to have a national insurance number to apply.
  • • If you are not a UK resident and you don’t reside within the European Union, the European Economic Area or a Swiss national you’ll need a valid visa/residence permit to be in the UK.
  • •You can apply for the metro bank instant cash ISA in any Metro Bank store.
  • • If you are an existing Metro Bank customer then you can apply through Online Banking.
  • • There is no minimum amount required to open the metro bank Instant Access Cash ISA.
  • • The maximum deposit amount is £20,000 for the 2019/2020 tax year. This is exclusive of any transfers you may make from any other ISA products.
  • •You can manage your account in-store, through Online Banking, our Mobile App or by telephone on 0345 08 08 500.
  • •You can cancel your Metro Bank Cash ISA within 14 calendar days of opening it. If you cancel in this period it will not count towards your annual ISA subscription limit. If you withdraw the funds it will count as a subscription.
  • •You can transfer money from an ISA with another bank or building society to the metro bank Instant Access Cash ISA.
  • •You’ll earn interest on this money before it arrives in your account – Metro bank will start paying interest from the date they receive your transfer request**.
  • •You can transfer as many previous years’ funds as you like into the Metro bank instant access cash ISA.
  • You can access the money in your Metro bank instant access cash ISA at any time.
  • • Funds withdrawn can be replaced in the same tax year providing you do not go over the annual ISA allowance.
  • •You can withdraw funds in any Metro Bank store. You can transfer funds to a Metro Bank or non Metro Bank account.
  • Transfers to other Metro Bank accounts are instant.
  • •You can set up one external account to transfer to. You can change that account up to three times per month.
  • You must provide a valid National Insurance number within 30 days of opening the account to keep you ISA tax-free status. If you don’t send in a valid National Insurance Number your account will be converted to an Instant Access Savings account.
  • •You can only subscribe to one Cash ISA in a tax year. The 2019/2020 tax year commenced 6 April 2019. Once you have reached your ISA subscription limit for a tax year, you cannot deposit any more.
  • • If you make any subscriptions to a Stocks and Shares ISA in the 2019/2020 tax year these subscriptions will be part of your overall £20,000 ISA limit.
  • • Issuing a banker’s cheque is £15 per item.
  • • Stopping a banker’s cheque is £10 per item.
  • • If your contact details are not up to date, then Metro bank may charge you any costs involved in trying to find you. For more details
  • on current interest rates, charges and charging dates visit metrobankonline.co.uk or call Metro bank on 0345 08 08 500.”

The Metro Bank fixed rate cash ISA

The metro bank fixed rate cash ISA offers a fixed rate which does not change.  You can either have a 1,2, 3, or 5 year metro bank fixed rate cash ISA.

The 1 year fixed rate ISA (issue 15) pays a fixed interest rate of 1.55%.

The 2 year fixed rate ISA (issue 9) pays a fixed interest rate of 1.75%.

The 3 year fixed rate ISA (issue 7) pays a fixed interest rate of 1.85%.

The 5 year fixed rate ISA (issue 7) pays a fixed interest rate of 2.10%.

The Interest is calculated daily and paid annually on or around 5th April each year.

The  Interest is paid tax free and is free from UK income tax and capital gains tax.

What you need to know about the Metro bank fixed rate cash ISA

  • •”You can apply to open a Fixed Rate Cash ISA if you are 16 or over and a UK resident. You must have a National Insurance number.
  • • If you are not a UK, EU, EEA or Swiss national you’ll need a valid visa/residence permit.
  • •You can apply in any Metro Bank store.
  • • There is no minimum amount required to open a Fixed Rate Cash ISA.
  • • The maximum deposit amount is £20,000 in the 2019/2020 tax year, plus transfers.
  • •You can transfer money from an ISA with another bank or building society to our Fixed Rate Cash ISA. You’ll need to do this within 30 days of opening your Fixed Rate Cash ISA.
  • •You’ll earn interest on this money before it arrives in your account – Metro bank will start paying interest from the date they receive your transfer request**.
  • •You can manage your account in store, through Online Banking or by telephone on 0345 08 08 500
  • •You can close your Fixed Rate Cash ISA without loss of interest or penalty up to 14 calendar days after you open it. If you cancel within this period any deposits will not count towards your annual ISA subscription limit. If you withdraw the funds it will count as a subscription.
  • •You cannot make partial withdrawals from a Fixed Rate Cash ISA. If you close or transfer your Fixed Rate Cash ISA to another provider before the maturity date you will lose 180 days interest. If your account has earned less than 180 days interest, then your original deposit will be paid to you or transferred to your new provider in full with no interest.
  • •Your Fixed Rate Cash ISA matures the day before the relevant anniversary date of your account opening and your deposit and any interest will be paid on the next working day. For example, if you open a 3-year Fixed Rate Cash ISA on 7 March 2019, your account will mature at close of business on 6 March 2022 and the deposit would be paid by close of business on 7 March 2022.
  • • If the Fixed Rate Cash ISA term end date falls on a weekend or bank holiday, your account will mature on the next working day and the balance and any interest will be available to you on the next working day from this date.
  • • Metro Bank will contact you within 30 days of your maturity date to remind you of your options at maturity. If they don’t hear from you, we’ll convert your account into an Instant Access Cash ISA when your account matures.
  • • A closing statement will be provided at maturity.
  • •You can instruct Metro bank to reinvest your money into a new Fixed Rate Cash ISA by calling or visiting them in Store.
  • •You must provide a valid National Insurance number within 30 days of opening the account to keep you ISA tax free status. If Metro bank don’t receive a valid National Insurance number your account will be converted to an Instant Access Savings account.
  • •You can only subscribe to one Cash ISA in a tax year. The 2019/2020 tax year commenced 6 April 2019. Once you have reached your ISA subscription limit for a tax year, you cannot deposit any more.
  • • If you make any subscriptions to a Stocks and Shares ISA in the 2019/2020 tax year these subscriptions will be part of your overall £20,000 ISA limit.
  • • If your contact details are not up to date, Metro bank may charge you any costs involved in trying to find you. For more details on current interest rates, charges and charging dates visit metrobankonline.co.uk or call them on 0345 08 08 500.”

The information provided on this page about the Metro Bank ISA is accurate at the time of writing. You should check with the Metro bank ISA website as some of the information on this page may have changed.

If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.