Abbey Reward Saver cash ISA – trick or treat

Consumerist

I've been seeing this ISA advertised recently on the tv and I also see that it is featured on this site.

Unfortunately, I can't help regarding this product with some suspicion.

The ISA includes the following features :–-

• 1.50% AER Tax Free (variable)
• Plus, a Reward Bonus of 2.00% AER Tax Free (variable) at the end of the first year when you leave your money untouched
• Giving you a total rate of 3.50% AER Tax Free (variable)
• You can access your money if you need to but you will lose the reward bonus

(I have added the bold highlights to illustrate my point)

So, what is the difference between this and a 3.50% variable ISA ?

One obvious difference is that if, during the first year, you think you can do better elsewhere, Abbey will penalise you heavily if you try to transfer.

For example, the basic rate could be reduced from the advertised 1.5% right the way down to 0%. You will then have to live with what little basic interest has been earned and the remaining 2.00% AER bonus at the end of the year.

But what is to stop that bonus also being reduced to a level which is not competitive.

Unless someone can explain any advantage to this ISA, I wouldn't touch it with the proverbial barge pole.
.

jimbow25

There's no advantage over a straightforward account whose rate is "3.5% variable" however you'll struggle to get a rate like that on any account which accepts transfers in, with no strings attached.

It does seem bad that they can vary the interest as much as they like and you'd be stuck with the money in there until you'd received your bonus, as you can't make any penalty free withdrawls. At least the Halifax 3% one allows 4 withdrawls without losing the bonus.

You'd be better off with a fixed rate ISA, as even the penalties for breaking those aren't normally as bad as "lose more than half the year's interest"!

Consumerist

jimbow25 wrote: »

you'll struggle to get a rate like that on any account which accepts transfers in, with no strings attached.

OK. But it seems to me that you would risk being taken for ride on any transfers-in as well as any new money you add.

It still looks like a booby trap to have a variable bonus on an ISA which you cannot escape from without heavy penalties. The minimum interest rate payable on this ISA is 0% even if its not over the entire year.

I just do not trust any bank's dirty-tricks department to be fair. It's a bank !

I would still advise any prospective saver to avoid this one like the plague.
.

adambro

I would agree, it looks awful.

book12

Go for Barclays Golden ISA with an interest rate of 3.61% AER instead. http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=homefreegroup&value=16092&target=_self&site=pfs