Barclays has launched a new cash ISA paying 3.61% AER, which trumps NatWest’s recently launched cash ISA and leads in the best-buy tables.
Unlike NatWest’s ISA, which pays 3.51% AER, Barclays’ offering is available to both new and existing customers and there is no requirement to take out another account with the bank. The Golden ISA pays a variable rate of interest of 3.61% AER and can be opened from as little as £1.
The rate includes a 12-month introductory bonus of 1%.
Unfortunately, Barclays’ account does not accept transfers of ISAs from previous tax years. Another downside is that interest is paid monthly – while this is good if you want to earn an income from your savings, it does mean you won’t benefit from compound interest. As such, the interest you’ll actually earn is 3.55%.
People yet to invest their £3,600 ISA allowance for the current tax year (2008/09) have until 5 April to do so because this allowance is lost forever.
Despite the tax benefit of ISAs, around 66% of savers don’t use their ISA allowance, according to research from savings bank Birmingham Midshires, This could be a costly mistake. By failing to use their ISA allowances, savers hand over an extra £100 million in unnecessary tax, research from Nationwide reveals.
Andy Gray, head of mortgages and savings at Barclays, says: “We would encourage customers who have not already subscribed to an ISA in the current tax year to apply as soon as possible so they do not miss out on their annual ISA allowance."
How does it compare?
|Provider & Account||AER||Are Transfers |
|Minimum Deposit||Withdrawals?||Additional |
|No||£1||Instant access||* Interest paid monthly |
* Rate includes 1% bonus
* Existing customers only
* Rate guaranteed to at least match the base rate until 01/02/10
Four-year Fixed Saver
* Rate fixed until 30/04/2012
* Access by post or in branch only
v = variable rate of interest
f = fixed rate of interest
* The AER increases to 4.01% for NatWest customers with an Advantage Gold or Private account