Post Office Money launches innovative 'mix and match' Cash ISA
New ISA gives savers the flexibility to benefit from variable and fixed rate products in one tax-free account.
Post Office Money has launched an innovative new Cash ISA.
The new Online ISA offers savers greater flexibility by allowing them to invest in more than one product in one tax-free account.
Post Office Money says it has created the offer to alleviate the frustration of current rules which restrict savers to opening one Cash ISA per tax year.
With the Post Office Money Online ISA savers will get one account but have the choice of multiple products to invest in, including a variable deal and two fixed rate options. This means savers can retain access to a chunk of their cash and lock up the rest in order to secure a higher return.
The Online ISA is the first product to be unveiled under the new Post Office Money brand, which launched last month with the aim of becoming one of the UK’s leading financial services providers by 2020.
What's on offer
The unrestricted Easy Access account pays a joint market-leading 1.50% variable interest and includes a 0.85% fixed bonus for the first 12 months. It can be opened with £100 and additional deposits can be made at any time. Interest is calculated daily and paid in March.
In terms of fixed rates, there's the One-Year Fixed Rate Bond, which pays a competitive rate of 1.55% or the Two-Year Fixed Rate Bond, which pays a market-leading 1.95%. Both can be opened from £500 but no additional deposits or withdrawals are permitted during the fixed term. Interest is calculated daily and paid on the anniversary of the account opening.
The Online ISA also comes with a unique ‘Holding Account’, which allows savers to consolidate old and new ISA subscriptions before deciding how to split them across the various products. This pays 0.65% on funds held.
Below is one way you could split £15,000 in savings across the products contained in the Online ISA.
|
Easy Access (1.5%) |
One-Year Fixed Rate (1.55%) |
Two-Year Fixed Rate (1.95%) |
Holding Account (0.65%) |
|
£1,500 |
£3,500 |
£10,000 |
£0 |
In the example above, the biggest proportion of savings is held in the higher return fixed rate bond and a smaller proportion in the one-year bond while some is kept on hand for emergencies in the easy access account.
But there are plenty of other ways you can split up your savings, especially if you have ISA savings from previous years to use.
You can transfer the Online ISA to another provider at any time but partial transfers are not permitted. However, if you hold a product which is within a fixed term, you’ll incur a Breakage Charge.
Withdrawals can be made to either the Holding Account, where the funds can then be reinvested into other products within your Online ISA and keep their-tax-free status, or a Nominated Account where the cash will lose its tax-free status.
The Online ISA, as you might expect, can only be opened and managed online.
ISA season
With the end of the tax year in April, we're now heading into the traditional ‘ISA season’ when providers tend to offer their best deals to attract new deposits.
To keep up to date on the latest best buy Cash ISAs bookmark The best Cash ISAs and Top Cash ISAs for transfers.
To see where you can get the very best return on your cash savings read: Where to earn most interest on your cash.
More on ISAs and savings:
Agribank: earn up to 3.3% on your savings
Where to earn most interest on your cash
'Millions' of ISA savers clueless about what returns they are getting
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