Top new ISAs for savvy savers

ISA season is starting early this year with a succession of new accounts launched.

ISA season tends to really kick off as we approach the end of the financial year in April, however this year there are signs that things are heating up somewhat early. Over the last couple of weeks we have seen a succession of competitive new ISAs launched.

Let’s take a look at the latest tax-free savings accounts, and how they compare to the existing deals in the marketplace.

Fixing for five years!

The first new product that caught my eye comes from Norwich & Peterborough Building Society, who have launched a new cash ISA offering a fixed rate of 4% - an exciting rate in these times. However, to get that rate you’ll need to lock your money away for a whopping FIVE YEARS!

Putting my money away for that long really doesn’t appeal to me at the moment. After all, with base rate due to start heading northwards fairly soon (as we explain in Base rate set to rise by May), 4% may not look like such a great rate by the end of the year, let alone by 2016!

Indeed, it’s not even the best rate available for such an ISA – with Northern Rock you can secure a rate of 4.3% on a five-year ISA, while Halifax actually offers a rate of 4.25% on a four-year deal, if you’re determined to lock your cash away for a while. Personally I’ll be sticking to shorter deals.

Fix your ISA rate

While five years strikes me as far too long to fix for, there is an argument for taking advantage of the many deals covering 18 months to two years.

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For starters, when base rate does start to rise, it’s likely that it will do so relatively slowly, so there’s less risk of missing out on juicy future rates with a deal of this length. And as these deals tend to offer a fixed rate of interest, you know exactly what return you’ll be getting on your cash.

A number of banks and building societies have launched new deals over the past couple of weeks that fall into this category.

Nationwide Building Society

Nationwide has launched an 18-month ISA paying 3% on sums of up to £9,999, 3.05% on sums between £10,000 and £24,999, 3.15% on balances between £25,000 and £49,999 and 3.25% on accounts boasting more than £50,000.

BM Savings

Birmingham Midshires has unveiled a new two-year ISA paying a rate of 3.40%, with a minimum investment of £1.

Lloyds TSB

Lloyds has launched a new two-year fixed rate cash ISA, paying 3.15%. However there is a catch – that rate is only paid on balances of £3,000 plus. So if you have £2,999 or less in the account, you’ll enjoy absolutely no interest on your cash.

Barnsley Building Society

Barnsley has unveiled a new two-year cash ISA paying a fixed rate of interest of 3.50%.

So how do these new deals compare to the rest of the deals in the market today? Here are the top three ISAs available over 18 months and the top four two-year deals.

Top ISAs for 18months+

Sticking for a year

However, many of us will prefer to go for a one-year deal, allowing us to move with a bit more flexibility should the interest rate situation change rather more quickly (and significantly) than is currently expected over the next year or two.

Here are some of the new 12 month deals launched over the past week or two.

Nationwide Building Society

The UK’s largest mutual has launched a new one-year ISA paying a rate of between 2.75% and 3% depending on your account’s size. For balances up to £9,999 you’ll get a rate of 2.75%, for sums between £10,000 and £24,999 you’ll enjoy 2.80%, for balances between £25,000 and £49,999 your money will receive 2.90% in interest, and sums above £50,000 get 3%.

However, this account is only available to those with a maturing Nationwide fixed rate ISA.

Barnsley Building Society

Barnsley has unveiled a one-year e-ISA paying a fixed rate of 3.2%. Accounts must be opened with a minimum of £100.

Principality Building Society

Principality has launched the Promise ISA, paying a variable rate of 2.30%, including a 0.8% bonus in the first year. Should you make no more than two withdrawals, then you can enjoy a 0.5% bonus if you keep the account for a second year!

West Bromwich Building Society

The WeBSave ISA has been launched by the West Brom, paying a variable rate of 2.87% (including a bonus of 1.12%).

Saffron Building Society

The one-year fixed rate cash ISA from Saffron has also been improved, with a rate of 2.75% now paid on your savings, should you want the option of transferring in from an old ISA. But if you don’t need to make use of such a facility, you can secure a rate of 3%.

So how do they compare? Here are the top five one-year ISAs:

Top one-year ISAs

Not just new deals

However, it’s not just new ISA deals that are worth noting – one major provider has also gone live with an important ISA promise over the last week which should be kept in mind.

Lloyds TSB has gone live with its Cash ISA Commitments, a package of promises which it believes will improve transparency and offer a better deal for ISA savers.

The commitments guarantee three things:

• When transferring from another provider, savers will receive interest from the day their transfer application form is received.
• Customers will be informed if their bonus or fixed term deal is coming to an end.
• During this year’s ISA season, if a customer opens a Lloyds cash ISA, its rate will always match or beat the equivalent standard savings rate.

Frankly, it’s a ridiculous situation that savers do not always receive interest immediately when transferring ISAs, so good on Lloyds for addressing that.

More: Check out our free ISA guides | Get a market-leading loan |  It's time to ditch your mortgage | 15 fabulous freebies for February!