Focus on: NEW market-leading ISA paying 3.07%

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Published:
04 January 2012
Topic:
News,Money,ISA

Anyone who has made saving more one of their New Year's resolutions may want to consider the new West Bromwich WeBSave ISA 4.

Exclusive to MoneySupermarket customers, this account is offering savers the opportunity to earn an impressive 3.07% tax-free interest on their cash.

Here, we take a closer look to see if it could be the right account for you...

What's the deal?

Available to both new and existing customers, the West Bromwich WeBSave ISA 4 requires a minimum deposit of £1,000 on account opening. The maximum amount that can be paid into the account this tax year is the cash ISA limit of £5,340.

Interest will be paid annually at the start of each tax year on April 6. 

A tempting benefit for account holders is that they can get instant access to their cash at any time and can also transfer money from previous ISAs. The account must be operated via the internet.

Any drawbacks?

The impressive rate of interest comes with a bonus of 1.07% which lasts until Feb 28 2013. After this, account holders may want to consider shopping around to see if there is an ISA with a more competitive rate to move their cash to.

The account can only be operated online so if you prefer to speak to someone face to face or over the phone, you may want to choose an ISA which offers branch or telephone access instead.

Verdict

Although inflation is still making it impossible for savers to earn decent real returns, paying into a high interest tax-free ISA can at least limit its erosive impact.

The West Bromwich WeBSave ISA 4 pays an impressive rate of interest and the fact that savers can access their money at any time makes it a very attractive option.

It will also appeal to savers who currently have money languishing in cash ISAs paying much lower rates of return and who are looking to transfer their money to a new account.

However, the minimum investment requirement of £1,000 on this account will mean it won't be suitable for smaller savers who want to pay in a few pounds each month rather than a lump sum.

As an alternative, the ING Direct Cash ISA, for example, while paying a lower rate of 3.00% tax-free interest, can be opened with a minimum investment of £1.

Again, this rate is only guaranteed for a year at which time savers may want to consider moving their money to an account with a more competitive rate.

Top tip

Although the WeBSave ISA 4 allows savers instant access to their money, you should think very carefully before making withdrawals from any cash ISA.

The reason for this is that once you have paid in the maximum amount permitted in any tax year, if you make a withdrawal, you cannot subsequently top up the account that same tax year.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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