M&S launches new instant-access cash ISA
M&S Money has released its brand new Advantage Cash ISA, which pays 3%.
The tax-free savings account allows transfers in from other ISAs, making it the second-best instant-access rate on the market for people looking for a better home for existing ISA savings.
The best rate on the market comes from Newcastle Building Society's Bonus ISA (Issue 2), which pays 3.05%. But the Newcastle account can only be operated by post, whereas the M&S account is accessible by post and over the phone.
The M&S ISA can be opened with a minimum £100 lump sum, and after that you can set up a monthly direct debit to pay at least £25 a month into the account. It pays a variable rate of 3%, which does not include a bonus rate so there's no need to worry about your rate plummeting in 12 months' time. M&S money will write to you if your variable rate changes.
"We hope that keeping Advantage Cash ISA simple will reassure customers that their tax-free money is in safe hands. We have handled thousands of ISA transfers from other providers in recent years, so customers can be confident that transferring their other ISAs to us will be simple and straightforward," says Fleur Carruthers, savings and investments manager at M&S Money.
The Moneywise verdict:
This is an attractive rate for ISA transfers and is a slightly better account than Newcastle Building Society's offer simply because it allows telephone access to your money as well as postal. It's certainly one to consider but better ISA interest rates may well emerge as the ISA season hots up in the run up to the tax deadline on 5 April.
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.