Cash ISAs: The Best Currently Available List

Kazza242

The first post of this thread has been updated.

There has been a lot of activity in the ISAs market over the last week.

Intelligent Finance have reduced the rate paid on their variable rate cash ISA from 2.75% to 2.50%.

Saga are launching a new 2 year fixed rate ISA paying 3.85% (for balances above £30K) on 6th October 2009. The rate of 3.50% is paid for balances from £1 - £29,999. Cheltenham & Gloucester have also launched a 2 year fixed rate ISA paying 3.75% on balances from £100+.

Bradford & Bingley, Abbey and Alliance & Leicester (all part of the Santander group) have launched new 2 year fixed rate ISAs paying 3.75%, 3.50% and 3.50% respectively.

Halifax have increased their fixed rate ISA rates to 4.25%, 4.00% and 3.75% for a four, three and two term respectively. Chelsea Building Society have launched a new postal fixed rate ISA paying 3.50% and a variable rate cash ISA for over 50s paying 3.25%. Both are available from 06 October 2009. Both Leeds Building Society and Northern Rock have released new issues of their popular fixed rate ISAs.

** A reminder that increased cash ISA allowances, from £3,600 to £5,100, (for people aged 50 or over by 5th April 2010) is going to come into effect from 6th October 2009. **

Just_landed

In Kazza's list of Isa's the Bradford & Bingleys 2 year fixed rate Isa is at a rate of 3.75% AER so I presume the gross rate will be a bit less but what will it be ? or can someone tell me how to work it out please. I hate when banks ect which try to confuse the saver.:mad:

Kazza242

Just_landed wrote: »

In Kazza's list of Isa's the Bradford & Bingleys 2 year fixed rate Isa is at a rate of 3.75% AER so I presume the gross rate will be a bit less but what will it be ? or can someone tell me how to work it out please. I hate when banks ect which try to confuse the saver.:mad:

The gross rate Bradford & Bingley have advertised is 3.69%. This is the rate you would receive each month if you chose the monthly interest option. If you leave your initial investment plus the interest in the ISA, it will receive an overall rate of 3.75% for the year. This is because you would be earning interest on your interest as well as the capital.

When comparing ISA rates the easiest way to compare them is the look at the AER.

Just_landed

Thanks Kazza. So if I put £3600 say for 1 year at 3.75% AER I would make £135.00 interest ?

Kazza242

Just_landed wrote: »

Thanks Kazza. So if I put £3600 say for 1 year at 3.75% AER I would make £135.00 interest ?

Yes, that's right. You would receive £135 interest if you left your £3,600 in the ISA for one year.

Just_landed

Thank you Kazza I was having a senior moment, when you mentioned monthly interest the penny dropped.

ilikepoints

What do people think to the Barnsley BS ISA - 3.04% - seems to make it best non fixed one?

boobbby

Kazza242 wrote: »

Yes, that's right. You would receive £135 interest if you left your £3,600 in the ISA for one year.

So you are saying that you get back interest of £135 even if you close this two year fixed account after one year. I would have thought this account would inccur a penalty and reduce the interest if only kept for just one year.

Baldur

boobbby wrote: »

So you are saying that you get back interest of £135 even if you close this two year fixed account after one year. I would have thought this account would inccur a penalty and reduce the interest if only kept for just one year.

No Kazza was not saying that, merely illustrating to a poster who was unsure about the implications of AER & gross rates how much interest an account paying 3.75%AER would earn in a complete year.

Closure of the B&B account before the maturity date would incur 120 days loss of interest.

The_Enforcer

ilikepoints wrote: »

What do people think to the Barnsley BS ISA - 3.04% - seems to make it best non fixed one?

This is a tiered account. You need £20k+ to qualify for 3%, whereas with Abbey you need £10k+ and First Direct only £1 is required to get the same rate.

On this basis, if you were after an account for existing ISA funds and/or new money with instant access then First Direct is likely to be the best option at the moment, particularly as the 3% rate is guaranteed - effectively a fixed rate without the withdrawal restrictions.

However, I think it is worthy of adding to the 'instant access/allows transfers in' list as the bottom tier of 2.65% is equal to Standard Life and beats Intelligent Finance at 2.5%. Full details here:

http://www.barnsley-bs.co.uk/savings/online_accounts/online_isa.html

Also, I notice that Martin's got it in his Top 3 on the ISAs page: http://www.moneysavingexpert.com/savings/best-cash-isa#instant.