A Good Mini-Cash ISA Paying 5.4% - 60 Day Withdrawal Restriction
October 2006
The West Bromwich Building Society has just launched a 60-day notice mini cash Individual Savings Account (ISA). The details are as follows -
- 5.40% interest rate fixed for 2 years
- Minimum investment is £2,000 and transfers from other ISA accounts held with other banks is possible
- If the account balance falls below £2,000 the interest rate drops to 4%
- Only one payment into the account is allowed, so for example you cannot have a direct debit paying in a fixed £50 or £100 a month
- Withdrawals can be made with 60 days notice
The interest rate, 5.4% is very hard to beat, especially as it’s tax-free which is a feature on all ISA accounts. However, the account does seem a little bit restrictive for most people. We would therefore only recommend it to those savers who have very large cash balances (ISA or not) who can afford to spread their money around a mixture of different savings account. Some instant access, some fixed rate bonds, accounts such as this one which have a 60 day notice etc.
But if you’ve just started out saving or want to open a new ISA account with great flexibility then the Halifax’s ISA Saver Direct is hard to beat -
- Interest rate of 5.00% tax-free
- No minimum deposit, and make as many deposits as you want (up to a maximum of £3,000 per year)
- Unlimited withdrawals a year (minimum £10) via telephone or online with no penalties
Summary
It is interesting to note that some are starting to question the real effectiveness of ISAs and are saying the actual benefits are more marketing than substance. Put it this way, on £3,000 the tax-free advantage of putting this money in an ISA is only around £30 a year.
A few financial experts are therefore suggesting that unless you started saving in an ISA many years ago and have built up a substantial cash balance you're better off putting money into a basic savings plan like ING Direct. This account pays 4.75% interest and has no small print such as minimums, maximums, x number of days notice to take cash out etc.
Something to think about depending on how large your savings are. If in doubt always got for flexibility when dealing with your money.
See Also
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