This new savings account offers a great return on your savings and a free Kindle to boot!
Stockbroker Selftrade is cashing in on the popularity of easy access cash ISAs by introducing one of its own with benefits that are equivalent to an ordinary savings account paying 5.5% AER or more.
Its ISA, which is usually the province of banks and building societies, comes with a free Kindle for new customers. This offer could be removed at any time, which presumably means when Selftrade runs out of Kindles. Selftrade says that the offer will end on 31 January at the latest.
The Amazon Kindle e-book reader you get is the newer and smaller version costing £89. It weighs just 170g with a 6” screen and wireless (and computerless) download of books. The Kindle comes with free “cloud” storage of books, which means up to 1,400 books can be stored on a remote server, ready for you to call down to your Kindle as needed. The Kindle also has 2GB of internal storage, although just 1.25GB is available for books. (For a great comparison of Kindle with its rivals, check out eBook readers: Amazon Kindle vs. the rest).
You get paid cash, too
In addition, customers of the new Selftrade Cash ISA get 2.62% interest, which works out at £131 in the first year on £5,000 of savings. This compares to a little over 3% in the highest-paying easy access cash ISAs. The interest rate is variable, although included in that is a fixed bonus of 1.71% for 12 months. As usual, you'll need to switch accounts again within 12 months in order to get the best possible deal.
Many journalists and readers misunderstand fixed bonuses and consider them to be a bad thing, but they're actually just guarantees that the variable interest rate won't fall below the specified amount – in this case 1.71% – during the bonus period. Without a bonus or other guarantee, the provider is free to reduce its interest rates to near zero as soon as it has reached its sales target.
To get the Kindle you have to deposit at least £5,000 and retain it in the account on 31 January 2012. You should get the Kindle by 17 February. Transfers from other ISAs are welcome and count towards getting the Kindle.
[SPOTLIGHT]If you deposit £5,000, the benefits including the Kindle total £220 over 12 months, assuming the variable part of the interest rate doesn't come down. This is the equivalent of 4.4% interest, which is like getting 5.5% in an easy-access savings account (since you don't pay tax on the interest earned in an ISA), or 7.3% for higher-rate taxpayers. This beats all other easy-access cash ISAs on the market, and many more besides.
Note that if you deposit more than £5,000, the equivalent interest rate will be lower. If you transfer in £10,000 from another ISA you'll get the equivalent of 4.4% in an ordinary savings account, or 5.85% if you're a higher-rate taxpayer.
Make sure you read the terms and conditions carefully to ensure you get the Kindle.
Other new savings deals
There are a couple of other new savings deals worth noting.
Insurer Legal & General has a new five-year savings bond that will pay at least the same as inflation (RPI) at the end. The Inflation Protected Deposit Bond 2 will pay at least 3.01% per year over five years, even if inflation is lower.
However, the insurer takes 2.5% of your savings in commission, so you'd probably be better off waiting for a free inflation-protected product. These have been showing up at a rate of one every three or four months for the past year or two, so hopefully we'll see another soon.
Derbyshire, Cheshire and Dunfermline Building Societies have launched a regular savings account paying 5% for 12 months. These sorts of savings accounts are suitable for people saving a regular amount from their income each month, but they're not so suitable for lump sums.
Apart from the interest rate, which is high compared to competing regular savings accounts, the Platinum Monthly Saver allows contributions between £100 and £500 per month, which is much more than most. It's also unusually flexible: you can vary that payment each month, you can make one withdrawal and you can even miss one payment, and you will still get the 5% interest rate.
More: compare cash ISAs and savings accounts through lovemoney.com | VAT rate change could cost you thousands