The AA currently offers two fixed rate products, for one and two years, under their AA ISA plan
AA ISA Fixed rate product key facts:
- Open with a deposit or transfer in of at least £500
- No upwards limit
- Interest calculated daily and paid yearly
- At the end of the fixed term your money is transferred to a holding account where it will retain its tax free status until you decide what to do with it.
- No additional deposits or withdrawals can be made during the fixed term
- Use your 2015/16 ISA allowance – up to £15,240 minus any contributions you may have already made to a stocks and shares ISA this tax year
- If you need to close the plan early there will be a breakage charge
If you are looking for a plan which requires you to lock away your money for a set time period you most likely want to make sure you’re getting the best deal you can.
You can look below at some of the latest fixed rate bonds available from various providers to give you an idea of what some of your different options are.
Although fixed rate bonds have the advantage of letting you know exactly how much interest you are going to be earning over the period of the plan. However if while you are locked into a bond interest rates rise, your plan may no longer be competitive, For this reason you may want to also consider a tracker plan. With this plan type interest rates set by the bank of England raise, so too will the interest rate you receive on the bond. On the other hand it may also fall if the base rate does.
Alternatively you may wish to consider a structured deposit plan. These can have higher interest rates than savings bonds. However this comes at a risk as your return is not guaranteed, it is dependent on the performance of a particular index like the FTSE 100. If it does not perform in a certain way you may not receive any interest payments therefore. However the return of your original sum is not at risk and is guaranteed.
If you would like to have your money more easily available in case you need you might want to consider an instant access savings account. The AA offers an easy access saving option under its ISA plan that can be opened with £100 which offers unlimited free withdrawals. However it is important to remember that many providers offer instant access options and the AA is just option of many, for this reason it is wise to shop around before picking a plan.