The Cheshire BS launches market-leading cash ISA
The account can be opened either online or by telephone with a minimum opening balance of £1,000. Withdrawals are not permitted during the term of the account but you can close it, although you will lose 180 days' interest. The account does not allow transfers from other ISAs.
As well as launching this new account, the Cheshire Building Society has also increased the rate on its variable-rate Direct Cash ISA. The account will now pay 3.16% to both new and existing customers - making it the top-rate variable ISA product.
The Direct Cash ISA is open to new subscriptions only - so no transfers in - and you'll need a minimum of £1,000 to open the account. The account can be opened online or by phone but is managed by post only. Customers can make as many deposits or withdrawals as they like.
The rate includes an introductory fixed bonus of 2.16% until 30 September 2013.
The Moneywise verdict: the Direct Fixed Rate ISA is definitely worth a look. It offers a rate of interest that is competitive without you having to lock your money up for a great length of time. You'll get a return of 0.75% more than on the best one-year accounts, while only having to wait a further six months to get your cash.
However, the Direct Cash ISA is less attractive. While it is the best instant-access account on the market it only beats the other market-leading instant-access accounts by 0.11%. And to get that extra 0.11% you will have to manage your account by post.
In contrast, the AA's Internet Access ISA pays 3.05% but as the title suggests the account can be managed online, which is far more convenient.
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.