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Best Cash ISA Savings Accounts- Northern Rock Fixed Rates- July 2008

Personal_Finance / ISA's Jul 30, 2008 - 11:51 AM GMT

By: Shahla_Walayat

Personal_Finance

Best Financial Markets Analysis Article

Three bank of interest rate cuts have taken rates down to 5% from 5.75% and savers are still enjoying excellent Cash ISA savings interest rates courtesy of the ongoing credit crunch. However as the UK economy slows towards a possible there will be further cuts in UK interest rates and therefore cash ISA savings rates have started to decline from recent heady rates which in some cases passed 6.5%.


As per my previous articles over the last 9 months, the current interest rate climate still favors fixed rate savings of 2 or more years over instant access accounts as a UK recession could see interest rates sharply lower a year from now.

Selection of the Current Best Cash ISA accounts (July 08)

Financial Institution Interest Rate Fixed Period Minimum £ Comments
Ruffler Bank 6.25% 30 day £3,600 Have gradually cut their minimum from 15k to 9k and now to 3.6k
Principality 6% Instant £1 Keep a sharp eye out for any change in rates.
Nationwide 6.15% 1 year £1 Longer fixes at same rate available
Halifax 6% 4 years £500 The rate has been cut from 6.20%
Northern Rock 6.30% 1 year £500 Probably the safest Place for your money as the bank is now owned by the government. Also offers fixes for 2 and 3 years.
Abbey Direct ISA 6% 1 year £1 Rate has been cut by 0.25%
Barclays Tax Haven ISA 6.25% Instant £1 Includes a 1% bonus for 12months - No Transfer in. rate has been cut from 6.50%. Barclays customer service has proved poor in handling account openings.

 

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 an excellent 6.25% instant access account. The only problem here is Barclays lack of competency observed in opening accounts, which does not seem to have improved from last years. An alternative would be Ruffler's 30day notice account, as Ruffler do consistently offer a good rate relative to the market.

Fixed Rates

The UK treasury backed Northern Rock bank offers the best cash ISA at 6.30% with multiple fix options of 1, 2 or 3 years. This is a market beater and therefore it may not stay on the market for much longer.

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 2008-09 is £3600.
  • 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 £3600 limit refers to total deposited, and not maximum account balance. So if you deposit £3600, and withdraw £1000, then you cannot re-deposit that £1000 in the same tax year as you have used up your £3600 deposit limit.
  • To maximize your tax free interest, it is best to open your account at the start of the tax year.
  • Ability to transfer Cash ISA monies into Shares ISA's but NOT from Shares ISA's to Cash ISA's.

By Shahla Walayat
http://www.moneyforums.co.uk

Copyright © http://www.moneyforums.co.uk 2008 - All Rights Reserved

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