Skipton launches new top rate 4.5% ISA
The bond is available on a 'first come first served basis', after the overwhelming popularity of the 5% fixed-rate ISA it launched at the beginning of March and had to withdraw recently due to high customer demand.
This new ISA is fixed for five years – so your money will be locked away for this time – but it currently offers one of the best ISA rates on the market.
Read our round-up of the best cash ISA rates
The next best rates come from Nationwide and Halifax that both offer similar deals of 4.4% on four-year fixed-rate ISAs.
The ISA account is available online, in-branch or by telephone, and it allows transfers in from other cash ISAs.
The minimum investment is £500; after this you can top it up to the new annual ISA allowance (£5,340 in 2010/11). But as this is a limited issue, as soon as it's withdrawn you won't be able to make any more deposits.
You'll be penalised if you access your money early, so balance withdrawals and early closure of the account are both subject to loss of 240 days' interest.
Kris Brewster, Skipton's head of products, says: "We're delighted to have come back to market straight away with this replacement product which remains very competitive. We expect this account to prove very popular and we hope it will help to raise further awareness among consumers of the value of having a tax-free savings account as part of a balanced portfolio."
This account works well if you want to tuck your savings out of reach and need the security of knowing you're getting a good interest rate. However, if you want earlier, or for immediate access stick to an instant-access ISA, even if the rates are lower.
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.