ISA of the week - Cheshire Building Society
The Direct Cash ISA gives you the flexibility of putting money away and withdrawing it whenever you want without penalty. It also has a low starting deposit of £1,000 and therefore is ideal for savers with a small pot to put away.
Although it's at the top of the charts, it is important to note that this account includes a bonus of 2.5% that will end on 30 September 2013 - at that point you should look to move the money elsewhere.
The account doesn't accept ISA transfers and it can only be operated by post, making it less flexible than similar accounts from the AA and NatWest. However, these both ask for higher initial deposits.
If you want to benefit from this year's £5,430 tax-free cash allowance then you'll need to send a cheque to the Cheshire BS by the 5 April to open the account.
If you're still hunting for a home for this year's ISA allowance and you need regular access to your cash, this is a good account to use. However, it can only be operated by post so if you would prefer an online account the instant-access ISA from the AA on the same rate may be a better choice - although this needs an initial deposit of £2,500.
There are also better rates available if you don't need to access your money early, such as Cheshire's 18-month ISA on 4% - but you won't be able to get your hands on the cash until it expires.
In addition, the account doesn't allow transfer ins, which is no good if you'd like to move an old cash ISA.
There's also the bonus rate to watch out for. Although is not uncommon for an account that have a bonus attached, it adds an extra hassle factor as you'll need to change accounts when the bonus expires to stop the interest rate plummeting.
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.