ISA rates are on the rise, as the end of the tax year approaches. With just five weeks until the tax deadline, savers are set to benefit from cash ISAs paying more than 6 per cent interest.
Barclays and Abbey both launched new cash ISA rates today, offering two of the most competitive rates on the market. Barclays’ Tax Haven ISA
offers a leading rate of 6.5 per cent and can be opened with just £1 online, in branch or over the telephone. However, Barclays do not allow transfers from other cash ISAs.Abbey’s Direct ISA
offers a tax free interest rate of 6.25 per cent and does allow transfers from other cash ISAs, demonstrating the pros and cons of a leading interest rate. Kevin Mountford, head of savings at price comparison site moneysupermarket.com said,
"On rate alone, Barclays is the clear leader with its 6.5 per cent Tax Haven ISA but, as ever, savers need to look at the whole package. For savers with previous sums to transfer, they will be better off with the Direct ISAs from Alliance & Leicester or Abbey at 6.25 per cent. The Barclays ISA doesn't allow transfers in, and many savers get caught out by this type of thing if they ignore the terms and conditions."
Other high interest rate offers include up to 10 per cent from Abbey’s Super ISA and the Alliance & Leicester ISAs
, particularly the Alliance & Leicester Premier Direct ISA Issue 2, but these are only offered under certain circumstances, moneysupermarket.com’s Mr Mountford warns,
"With Alliance & Leicester, only savers that open its Premier current account can access the ISA. Abbey's Super ISA insists savers deposit at least £1,500 in its Guaranteed Growth Plan. Again, this shows the need for savers to check what they are signing up for as things aren't always what they seem."
According to new research by Lloyds TSB savings, more than nine out of ten UK adults are not using their full tax free savings allowance and two thirds of existing ISA holders admit to never shopping around for a better deal. Liz Hogbin, Savings and Investments Director for Lloyds TSB commented,
"Sometimes shopping around can be really worthwhile, and by resting on their laurels, many ISA savers are actually losing out on easy money. For instance, the average interest rate on an ISA balance of £9,000 is 5.36 per cent, but by switching to an account offering 6.5 per cent you could earn 20 per cent more tax free interest for very little effort."
© Fair Investment Company Ltd