First Direct cash e-ISA allows you to invest tax-free and enjoy a return of 2.72% AER.
- Account can be opened online from 14 February 2011 and the advertised rate is fixed until 31 August 2012.
- Application must be made online, but then it is possible to manage your account by phone, by post or through First Direct Internet Banking system.
- A minimum investment is just £1 and you can invest up to the 2011-2012 tax year cash ISA limit of £5,340.
Transfers in from other providers are allowed, both from previous and current tax years, but it is impossible to transfer other First Direct ISAs into this new account. Cash ISAs from other providers can be transferred without any maximum limit.
Withdrawals can be made by instant transfer to another First Direct account or by transfer to an account held with another provider. Withdrawals are completely free of charge and can be arrange by phone or via internet. Just remember that it is not possible to reinvest any sums, previously withdrawn from an ISA, if you have already reached the subscription limit for the current year.
Attention though, First Direct cash e-ISA is a real Cinderella, as interest turns to a miserable (and variable) rate of 0.2% beginning from 1 September 2012. Do not follow the example of those who never transfer their ISAs and savings accounts once the promotional offers expire and thus lose on potential profit.
Northern Rock has announced an increase of interest rates on its online fixed-rate cash ISAs, a welcome move, supposed to help the savers struggle with inflation.
The change concerns Northern Rock e-ISA Issue 4 account that will now bring you 3.2% interest (ISAs operated in branch and by post render only 3.05%).
Kent Reliance Building Society has launched an Inflation Linked Cash ISA fixed over a period of five years and paying interest that is tied up to the rise of the Retail Prices Index (RPI).
It is a limited product, available only from 6 April to 21 May 2011 and can be withdrawn at any moment. The cash ISA will be opened from 1 June 2011 and it matures on 31 May 2016 paying at that moment 100% of any growth in inflation between April 2011 and April 2016.
April is a busy month, that with rushing to make use of the last tax ISA allowance and picking up the best deal. But once the 6 April is over, you can begin thinking about finding the best home for the 2011/2012 tax year allowance. One thing is sure: it is going to be bigger than last year – you can now invest tax-free a maximum of £5,340 into a cash ISA, the total amount invested both in Cash ISA and stocks and shares ISA being £10,680.
So, what are your options with this new allowance?
You can open a new cash ISA account. Remember that if you do not use a tax-year allowance in the specified year, it is lost and cannot be used later.
If you already have a cash ISA and are happy with it, see if you can top it up with the new year’a allowance. But this option depends on the type of the ISA you are holding and is not always allowed.
Don’t leave your money forgotten in an old ISA. Some ISA providers offer attractive bonus rates and when those expire, you get a miserable return of under 1%. Although banks and building societies now have to warn the customers about the bonus expiry date, it is better to set yourself a note and to begin shopping around for a better deal well before that.
Fot more on cash ISAs and stocks and shares ISAs see “What Is an ISA – Best ISA Advice” and “Best Rates of Instant Access Cash ISAs”.
Northern Rock has just pulled off its Five-Year Fixed Rate Notice Bond paying 4% AER, due to huge interest it attracted. Applications are not accepted as of 7 April 2011, but if you managed to make yours before this date, it will be honoured. Situation with those who sent a filled in application form by post is more uncertain, as Northern Rock will only consider those which arrive no later than by the morning post of 12 April.
