ISA focus: the NatWest e-ISA
NatWest has increased the rate on its instant-access cash ISA by 1% in an attempt to lure in new customers.
The 1% rise comes in the form of a 12-month bonus and has pushed the bank's ISA nearer to the top of the market. But the level of interest you'll earn is staged and depends on how much money you have in the account.
The ISA now pays 3% interest on balances of up to £9,999, 3.25% on between £10,000 and £29,999, and if you have more than £30,000 the account will pay out 3.5%.
As there is a bonus included, the rates will drop after 12 months and at this point you'll need to switch your money elsewhere to get a better deal.
There are no withdrawal penalties and the account can be opened and managed online.
If you have more than £30,000 sitting in an old ISA that isn't earning much interest, you could transfer this into the NatWest e-ISA and start earning 3.5%. This is a competitive rate for an instant-access account.
But if you have less than £30,000, then a look at all the instant-access accounts on the market shows a handful beating this rate.
Although this account is hitting the headlines because of the increased rate, NatWest has just tacked on a bonus of 1% for a year and after this time you'll need to go through the process of switching your money if you want a decent rate of return.
See our regularly updated best cash ISA feature for all the top rates
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.