This is the top rate currently available for easy access ISAs, but it is only available to those with at least £25,000 or more to invest. Savers who pay in the minimum £1,000 permitted to open this account earn a much lower rate of 2.75%.
Here, we examine the small print of the Nationwide ISA, and look at some of the alternatives for those with smaller sums to invest.
What's the deal?
The Nationwide Online ISA, which accepts transfers from existing ISAs, pays up to 3.10%, fixed until January 2013, but you'll need a minimum balance of £25,000 to qualify for that market-leading rate. If you pay in between £1,000 and £24,999, you will earn 2.75%.
You must also be a Nationwide card account customer to be eligible to open the account.
With the Bank of England base rate still languishing at 0.5% after more than two and half years, savers who do have significant sums to invest will be hard pressed to find as competitive a rate elsewhere.
Customers are free to make transfers in from existing ISAs and to make instant, unlimited withdrawals. You can also make deposits whenever you want, provided they don't exceed this year's annual £5,340 ISA allowance.
You need to be at least 16 years of age to open an account and the account must be opened and managed online.
Interest is paid annually on 31 August.
Any catches?
Nationwide's Online ISA top rate of 3.10% is hard to beat, but it will be out of reach for many savers who don't have as much £25,000 to invest.
The account is also only available to Nationwide card account customers, excluding Regular Savings, so if you aren't an existing customer you will have to open a Nationwide account before you can apply for the ISA.
It's also worth bearing in mind that while the top rate of interest is impressive, it includes a bonus of 2.10% which is only payable until the end of January 2013. After that the rate will drop to just 1.00% variable, so you will need to move your money then.
And for any day your balance dips below the £1,000 mark, you'll earn a paltry rate of just 0.25%.
What's the verdict?
Smaller savers are going to be left out in the cold because you only get the headline rate of this account if you have more than £25,000 in cash ISAs. This can include your 2011 allowance.
If you can't do this, then Northern Rock's eISA might be a better fit for you.
The Northern Rock account, which is exclusive to MoneySupermarket, pays 3.05% which is not only competitive, but it does not include a bonus which will disappear after a year or more.
However, the rate is variable and so it's subject to change at any time - even if the base rate stays the same.
Like the Nationwide Online ISA, the Northern Rock eISA allows you to transfer in any number of balances from other existing ISA accounts. If you're not making any transfers you can open the account with as little as £1.
Top tip
The cash ISA allowance for 2011 is £5,340, but if you'd invested £3,000 in a cash ISA so far this year and withdrew £500 tomorrow, you'd still only be able to invest the remainder of your allowance (£2,340) for the tax year.
You wouldn't be allowed to put that £500 back in and then continue using your allowance up to £5,340, as then your overall investment for the year would be £5,840 and would exceed your allowance.
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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