The deadline for investment into an Individual Savings Account (ISA) is just a matter of weeks away.
Brits are allowed to invest up to £5,100 in an ISA before 5 April and financial institutions have begun
to offer increasingly attractive rates to encourage savers to deposit their ISA allowance by the end of
the tax year.
ISA rates up
The Independent reports that ‘a month ago, the best-buy instant-access cash ISA was paying just 2.9
per cent; now, it’s 3.35 per cent from the AA.’ The newspaper also highlights a range of fixed rate
ISAs that have been introduced over recent days, including a five year fixed rate at 5 per cent from
the Skipton Building Society and a four-year fixed rate ISA from Cheshire Building Society, paying 4.4
Michelle Slade from financial information site Moneyfacts commented that “the average ISA rate is
at its highest level for the whole two-year period of base rate being at 0.5 per cent.”
Loyalty deals look good – but beware the bonus period
Two popular ISA providers – Santander and Halifax – reward their current account customers with
some excellent ISA rates including a 0.2 per cent interest bonus. The Independent reports that with
the bonus the accounts pay 3.5 per cent and 3.2 respectively.
However, experts have issued a warning that these two ISAs, plus many others in the market, offer
an excellent introductory interest rate that reduces substantially later on.
Andrew Hagger from a leading financial website said: “Once the bonus rate expires from the latest
deals the new Santander Flexible ISA rate will drop by a massive 2.65 per cent, the AA by 1.65 per
cent and the new Barclays deal by 1 per cent, so it’s vital that you make a note in your diary or
iPhone to switch your balance after the year is up.”