Best Cash ISA Savings Accounts- Barclays Tax Haven ISA -March 2008
Personal_Finance / ISA's Mar 10, 2008 - 07:41 PM GMTBy: Shahla_Walayat
The end of the Tax year is little more than 3 weeks away giving enough time for savers to make sure that their cash ISA allowances are fully utilised. Savers can still enjoy remarkably good rates of interest despite two Bank of England interest rate cuts to 5.25%. This continues to be as a consequence of the credit crunch which means that cash starved banks are willing to pay savers that bit extra to get cash in through the doors. Though as the economy slows there will be further cuts in UK interest rates and therefore cash ISA savings rates will decline further from the heady levels approaching 7% seen in October 2007.
As per my previous articles over the last 6 months, the current interest rate climate still favors fixed rate savings of 1, 2 or more years over instant access accounts as a UK recession could see interest rates sharply lower less than a year from now.
Selection of the Current Best Cash ISA accounts (March 08)
| Financial Institution | Interest Rate | Fixed Period | Minimum £ | Comments |
| Ruffler Bank | 6.14% | 30 day | £9,000 | Would need to transfer a cash ISA to meet opening requirements of £9k(down from 15k) |
| Lloyds TSB | 6.50% | 1 year Fix | £9000 | Requires a balance of over £9000 for 6.5%, £3000 only pays 5%. So a Transfer in ISA. Remember to move at end of term as the variable rate is low (5%) |
| Principality | 6% | Instant | £1 | Keep a sharp eye out for any change in rates. |
| Nationwide | 6.15% | 1 years | £1 | Longer fixes at same rate available |
| Halifax | 6.20% | 4 years | £3,000 | For a good long-term fix - Short-term fixes are no longer competitive. |
| Northern Rock | 6.10% | 1 year | £500 | Probably the safest Place for your money as the bank is now owned by the government |
| Abbey Direct ISA | 6.25% | 1 year | £1 | Issue 2- Includes 0.5% bonus for 12 months |
| Barclays Tax Haven ISA | 6.50% | Instant | £1 | Includes a 1% bonus for 12months - No Transfer in. |
Best of the above:
Instant Access
Many Instant access accounts such as Kent Reliance and National Savings have left the table due to the impact of rate cuts. However Barclays re-enters the arena with a whopping 6.5% instant access account and hopefully Barclays will this time show itself to be more competent in opening accounts than last year. Barclays - Don't Let Us Down This Year !
Fixed Rates
There does not seem to be an alternative for NEW ISA's to Barclays guaranteed rate of 6.5%, which beats all the fixed rate deals for £3k deposits, but no transfer ins. For transferring and consolidation of your cash ISA's the TSB 6.5% stands out for savings of over £9000. The 4 year fix with the Halifax at 6.20% is enticing in the face of much lower interest rates in the future, i.e. 12 months from now interest rates could be another 1% lower, therefore the rates available at that time could be pretty poor and thus a better option may be going with the Halifax 4 year fix, which has the added bonus allowing transfers in.
Summary of Cash ISA Rules & Benefits
- The CASH ISA accounts are TAX FREE, and do not have to be entered onto any tax returns. The equivalent taxable return on a 6% cash ISA for standard rate tax payers is 7.2%. For higher rate tax payers it is 8.4%.
- The income from tax ISA's does not count against many mean tested benefits such as Tax Credits.
- The Allowance for 2007-08 is £3000.
- You can only open ONE New cash ISA per tax year, and you can add new monies to One Cash ISA per tax year (see transfers).
- You do not have to open a Cash ISA with your existing provider, i.e. you can open an account at different providers every year.
- Most providers allow for transfers in. And ALL should allow you to transfer out.
- Once you withdraw from a Cash ISA you cannot then then re-deposit into. The £3000 limit refers to total deposited, and not maximum account balance. So if you deposit £3000, and withdraw £1000, then you cannot re-deposit that £1000 in the same tax year as you have used up your £3000 deposit limit.
- To maximize your tax free interest, it is best to open your account at the start of the tax year.
Changes from 6th April 2008
- Annual cash ISA allowance rises to £3,600 for 2008-09.
- No longer be called mini cash ISA, instead will be called Cash ISA. Same applied to TOISA's.
- Ability to transfer Cash ISA monies into Shares ISA's but NOT from Shares ISA's to Cash ISA's.
By Shahla Walayat
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