ISA feature: Coventry BS 60 Day Notice ISA 3
If you haven't already opened a cash ISA for the current tax year (2012/13), with less than two weeks to go this account might be worth considering.
Because it's a notice account, savers must notify Coventry 60 days before withdrawing any money from the account, otherwise they will lose 60 days' interest as a penalty.
The only catch is that the rate includes a 0.6% 12-month bonus, so you will need to remember to shop around for the best rate available after the 12-month period is up. You can open the account with just £1, but transfers in from other cash ISAs are not permitted.
Savers can manage their account online, by post, over the phone or in branch. To take advantage of the rate, savers need to act fast, as the account may be withdrawn at any time.
For more information about the account and to find your nearest branch, go to coventrybuildingsociety.co.uk or call 0845 766 5522.
A savings account on which the account holder is required to give a period of notice before making a withdrawal or face a penalty, usually a loss of a specific number of days’ interest or pay a fee. Notice periods of 30, 60 or 90 days are common. These accounts usually pay higher than average interest rates and require large initial deposits (£1,000 minimum) so the notice period and penalties are there to discourage withdrawals. Some of these accounts will only allow a certain number of withdrawals a year.
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.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.