NatWest has launched a new ISA deal paying up to 7.32% AER for people with previous tax-free savings to transfer.
While the headline rate on this deal looks extremely attractive, there are a few conditions. The rate you actually earn on your money depends on how much cash you put into the account.
The basic AER on this product is 4.6% and anyone depositing £1 plus will receive this amount.
However, anyone making a transfer from another provider (other than Royal Bank of Scotland, which owns NatWest) will benefit from a 2% bonus for the first 12 months – bringing your AER to 6.67%.
This rate increases further as your balance does. For transfer customers, depositing more than £9,000 will earn you 6.87% AER, more than £18,000 will earn you 7.16%, and more than £27,000 will earn you 7.32%.
Other features of this deal include no penalties for withdrawals, as well as access via phone, post, branch and the internet.
However, bear in mind that interest is earned monthly, so you won’t benefit from compound interest, and that this account is only available to people that hold or open an instant access NatWest account. Finally, the interest rates on this deal are variable, so could fall if Bank of England base rate does.
How does it compare?
Top cash ISAs
| Provider | AER* | Deposit | Transfers | Additional info |
| Barclays Bank Tax Haven ISA | 6.25% | £1 | No | Includes 1% bonus |
| Egg Cash ISA | 6.05% | £1 | No | Base rate guarantee until 05/04/09 |
| National Counties Guaranteed Cash ISA | 6.01% | £1 | Yes | No withdrawal penalties plus base rate guarantee until 06/04/09 |
| Principality e-ISA | 6% | £1 | No | No withdrawal limitations |
| Birmingham Midshires Direct ISA | 6% | £1 | Yes | Four penalty withdrawals a year |
| Source: Moneyfacts 10/10/08 * All accounts have variable interest rates |
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