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Check your ISA rate savers urged

Check your ISA rate savers urged

Category: Savings

Updated: 16/03/2011
First Published: 16/03/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

ISA savers have been warned to check the rate offered by their tax free account, and many could be in for a nasty shock.

In the run up to the ISA season, more and more headline grabbing accounts are being launched, many of which include attractive introductory bonuses.

However, not a single ISA with such a bonus extends the bonus past their initial first year, research by Moneyfacts.co.uk shows.

So if you've had your ISA for a year or more, now might be the time to dig out your statement or terms and conditions to check whether your bonus has come to an abrupt halt, leaving your once cracking rate looking a bit limp.

While your ISA may appear to be the same as the market leading account that's being plugged online or in branch windows, many accounts retain the same name for years.

However, providers consistently review their rates, simply changing the issue number, and not the actual name of the account.

For instance, the latest issue might pay 2.25%, with an introductory bonus or 1.25%, but your more than a year old ISA will only pay the underlying rate of 1.00% as the bonus period has expired.

"Interest paid in the second or subsequent year of an ISA that had an introductory bonus can be a very sad imitation of the original attention grabbing rate because, without the bonus element to prop it up, the remaining rate paid can be very low," said Sylvia Waycot, spokesperson for Moneyfacts.co.uk.

"Pitfalls to watch out for are long standing account names as they will be issue based and each issue will pay a different rate; the older the account generally means the worse the rate."

"To add further confusion, some accounts are not issue led but date led, so you can have three people opening accounts with the same name in different weeks all getting different rates regardless of the account to all intent and purpose being the same."

"It is not enough to make sure you are getting the best rate when you open an account, you need to check it is still the best every year."

Below is a selection of the best cash ISAs with bonuses, but make sure you know when you need to review your rate

Cash ISAs
Provider Account % Gross Notes

first direct
Cash e-ISA 2.72

Current issue: Rate drops to 0.20% from 31.8.12


first direct
Cash e-ISA 2.47

Previous issue: Rate drops to 0.20% from 30.6.12


first direct
Cash e-ISA 2.62

Previous issue: Rate drops to 0.20% from 31.10.11


first direct
Cash e-ISA 2.72

Previous issue: Rate drops to 0.20% from 31.8.11


first direct
Cash e-ISA 2.47

Previous issue: Rate drops to 0.20% from 30.6.11


Nationwide BS


e-ISA 3.10

Current issue: Accounts opened from 1.2.11 Rate drops to 1.75% from 31.7.12


Nationwide BS
e-ISA 2.80

Previous issue: Accounts opened from 10.12.10 Rate drops to 1.75% from 31.12.11


Nationwide BS
e-ISA 2.75

Previous issue: Accounts prior to 10.12.10 Rate drops to 1.75% from 30.6.11


Santander
Flexible ISA issue 3 3.30

Current issue: Rate drops to 0.50% 12 months from opening


Santander
Flexible ISA issue 2 3.20

Previous issue: Accounts opened 6.4.10 -3.10.10 Rate drops to 0.50% 12 months from opening


Santander
Flexible ISA issue 1 3.50

Previous issue: Accounts opened 22.2.10 -5.4.10 Rate drops to 0.50% 12 months from opening

Source: moneyfacts.co.uk 15.03.11































Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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