ISA of the week - Cheshire Building Society

30 March 2012

Cheshire Building Society is offering a market-leading instant-access ISA paying 3.5%.

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.

Moneywise verdict:

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. 

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