Savers getting an ISA bonus – but only for a year - Savings - News - Moneyfacts

News

Savers getting an ISA bonus – but only for a year

Savers getting an ISA bonus – but only for a year

Category: Savings

Updated: 15/03/2012
First Published: 15/03/2012

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 It is now over 6 months old so the content may be out of date.
Providers are increasingly looking to boost rates of interest on offer from variable cash ISAs by including introductory bonuses, research from Moneyfacts.co.uk has found.

The number of Best Buy products has increased significantly in recent weeks as banks and building societies look to attract savers' funds.

And many of this season's variable cash ISAs include large introductory bonuses, designed to boost the initial rate and attract customers.

There are currently 178 variable rate cash ISAs, with 40 of them including an introductory bonus.

The bonuses boost the rate in the first 12 months of the offer, but just the underlying rate – one that is far less generous – is paid from that point.

Figures show that the average rate of interest on offer from variable cash ISAs is 1.91% presently, but for many of the accounts, the majority of the interest is made up by a bonus, which usually only has a shelf-life of 12 months.

The average size of a bonus on variable cash ISAs is 1.32% presently.

"Savers looking for a competitive tax-free investment at the moment are spoilt for choice. We have seen a surge in new ISA products over the past few weeks and this is predicted to continue until the beginning of the new tax year in early April," said Louise Holmes, spokesperson for Moneyfacts.co.uk.

"Out of the current top five variable ISA rates, four include introductory bonuses equating to a substantial portion of the overall rate.

"Savers looking for a competitive rate must bear in mind that no matter how appealing the initial rate looks, the rate of return will drop significantly once the bonus period expires.

"It would be wise for savers opting for these types of accounts to make a note of when their bonus period is due to expire. This should allow enough time to review savings options, transfer funds to another competitive account and ultimately avoid the disappointment of reverting to a measly return."

To begin your search for the best ISA for you, check the Moneyfacts.co.uk ISA Best Buy tables.

What next

Looking for a Cash ISA - Compare cash isa rates

Download our free Beginner's Guide to ISAs to find out how to use your 2011/12 ISA allowance. You will need a PDF reader such as Adobe Reader to download this guide.

Request a FREE ISA Savings brochure now


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.

Related Articles

Savings being used as a festive financial buffer

Good news from RCI Bank UK – its latest research shows that many of us are saving more than we were a year ago, but the question is, will you be dipping into that buffer to cover the cost of Christmas?

6 of the best easy access savings accounts

Easy-access savings accounts are as simple as they sound – they allow you to access your money whenever you need it, without having to give advance notice, and they also allow you to pay into them at any time. Here are six of the best.

Start saving for Christmas… 2017!

Christmas is just around the corner and our annual festive splurging is starting to step up, but are you prepared? It may be too late to start saving for this year’s festive spend, but it’s never too early to start for next year’s!
 
Close