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Happy new Isa year
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The last tax-year ended more than a week ago and rates have been cut by 0.25% since then, yet appealing interest rates are still being offered on cash Isas. Find out which deals you should consider before banks pull the top rates
HM Revenue and Customs has found that we invested in Isas at record levels during the last tax year, with the high rates currently on offer making it likely this will be topped in 2008/09.
The credit crunch might mean it’s difficult to find a loan and even harder to get approval for a mortgage. But it also means the banks want our money and are offering good interest rates for your savings in order to get it – including offers on cash Isas.
The Bank of England’s Monetary Policy Committee last week reduced the Bank rate by 0.25%</money/mortgage/23042.htm>, meaning the gap between the top savings rates and Bank rate has never been wider, according to data provider Moneyfacts.
It’s not feasible for this to last long – so you’ll need to act quickly to ensure you take advantage of these high rates before more banks do the same as Birmingham Midshires, which today withdrew its Direct Isa (2nd issue) that was paying 6.35%.
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Top interest rates
There are still some good deals on offer, such as Barclays Bank’s Tax Haven Isa, which gives 6.5% interest over the year. This account was launched in the final months of the last tax-year to attract those not wanting to lose their Isa allowance for the year, but is still available.
You can start the account with only £1, but need to beware that this includes an introductory bonus of 1% for the first 12 months.
Saffron Building Society’s Cash 60 Day Notice Isa (Issue 2) includes a 0.95% bonus for nine months, which helps place it on the best buy tables with a rate of 6.25%.
However, it’s worth noting that it’ll give you an annual equivalent return (AER) of 6.01%. Other restrictions on this account are the 60 day notice period and that you need to make an initial investment of £1,000.
by Martin Pegan, 15 April 2008
