The Daily Telegraph - Saturday - Money
How to score with your Isa opportunities
You can now save more in a tax-free Isa than ever before. With the new tax year under way, savers can now put £5,640 into a cash Isa (and up to £11,280 in an equity Isa).
There is little difference between the interest rates for non-isa and Isa savings products, which means that taxpayers will reap the reward from the tax benefits if they opt for an Isa.
When it pays to be loyal
The Flexclusive Isa from Nationwide pays a very impressive 4.25pc, but is available only to existing customers or those who open a Nationwide Flexaccount.
The Flexclusive Isa rate is 0.75pc higher than the next best instant access Isa and pays 1.5pc above Bank Rate until January 1 2014, plus a bonus of 2.25pc until October 31 2013. Verdict This is a good example of how Nationwide is looking to offer “best of market” products to win and retain current account business and follows hot on the heels of its best-buy Select credit card.
“Some banks will offer you one-off cash incentives to switch, whereas the Nationwide Building Society strategy is built around long-term good value as a reward for loyalty,” said Andrew Hagger of Moneynet.co.uk.
A gimmick-free account
Sainsbury’s Finance has launched a new online-only savings account that pays a competitive rate of 2.75pc. Unlike many of the best-buy deals, the esaver Special does not come with an introductory bonus.
The minimum opening balance is £1,000 and maximum balance £100,000. However, be aware that if the balance drops below £1,000, your interest rate falls to just 0.5pc. Verdict On rival accounts, rates between 3pc and 3.15pc are common, but often include a 12-month promotional rate and/or withdrawal restrictions – so the fact that this account does not have these is a bonus. For people who don’t have the time or inclination to switch savings accounts every 12 months, this straightforward, no-gimmicks offering from Sainsbury’s ticks all the right boxes.
Isa for a lump sum
Cheshire Building Society has a market-leading cash Isa paying 3.5pc, which includes a bonus of 2.5pc until October 31 2013. Existing Isa balances cannot be transferred. This account requires a minimum deposit of £1,000 and allows unlimited withdrawals. Verdict The market-leading rate of 3.5pc is only for balances of more than £1,000 – anything below will receive a paltry 0.25pc, so this account may not be suitable for those unable to deposit a lump sum.
Regular saver Isa
Wales-based Principality Building Society has launched a range of Isas for the new tax year. The Regular Saver Isa pays up to 4pc and may be suitable for anyone who cannot afford to invest a lump sum in an Isa at the start of the tax year. A minimum opening and monthly deposit of £20 is required, with a maximum of £470 a month. Verdict With a one-year term, this competitive rate means that savers who can afford to deposit the maximum monthly amount will earn £122.20 interest at maturity. However, closure of the Regular Saver Isa or failure to make required monthly payment will result in interest being calculated at a rate equivalent to Principality’s Variable Cash Isa account – a meagre 0.6pc – so savers who are not going to be able to save regularly should avoid it.
Fixed-rate bond
BM Savings has launched a marketleading two-year fixed-rate bond paying 3.9pc. Applications are made online or by phone but managed by post. Interest is paid annually on anniversary of first deposit. Verdict This bond permits withdrawals but they are subject to a charge – so the Isa is not ideal for those who need access to their cash. The amount charged depends on the remaining term of the account – it’s the equivalent of the number of days’ gross interest, which can range from 90 to 180 days, on the amount withdrawn.