Santander Major ISA: Rory McIlroy can get you a better rate on your ISA!

With the new Santander Major ISA, savers need to keep an eye on Rory McIlroy. If he wins a Major, they'll get a better rate of interest!

Winston Churchill wasn’t a fan.

The former Prime Minister once described golf as the perfect way to spoil a good walk (though the quote has also been attributed to Mark Twain). However, whether you know your nine-iron from your putter or not, it’s becoming more important for all of us to keep an eye on what’s happening in the world of golf.

After all, for some savers, it could lead to extra cash in their pocket...

The Santander Major ISA

 A new savings account, the two-year fixed rate Major ISA, has been launched by Santander. The account pays a rate of 4% AER (tax free of course, as it’s an ISA) over the term of the ISA.

However, the bonus for savers is that should Rory McIlroy win a golf Major during the two years of the ISA, savers will get an additional 0.1% bonus.

How it compares

We’ll come onto the golf bit in a minute, but for now, let’s take a look at how this account compares to its rivals in the two-year ISA market.

So the Santander Major ISA is a cracking savings account, even without the bonus. It’s also a great option for savers just starting out with an ISA as they won’t need to have £500 already set aside ready to be placed in the ISA.

And should you manage to secure the bonus, the Santander account actually becomes the top account. So, just how likely are you to get that extra 0.1%?

Will I get the bonus?

So long as Rory McIlroy wins a Major in the next two years, you’ll get a bonus of 0.1%. Three questions arise from that statement. Who is Rory McIlroy? What is a Major? And what are the chances of the former winning the latter in the next two years?

McIlroy is a British golfer, who is currently ranked number two in the world (he was the world number one until last weekend). So that should tell you that he’s fairly handy at getting the ball in the hole in fewer shots that everyone else.

There are four golfing Majors each year: The Masters, the US Open, the Open and the PGA Championship. These are the elite competitions, the most prestigious events in the golfing calendar.

So you’re relying on the second best golfer in the world winning one of the big four championships once in a two-year period. That strikes me as a pretty decent bet, particularly as he has already won one major before, the US Open in 2011.

That said, being ranked the top player in the world is no guarantee of Major success. Luke Donald, who surpassed McIlroy as number one last week, has never won a Major. Nor did Lee Westwood, another Brit who reached the number one spot a couple of years ago.

So while there’s a decent chance, I wouldn’t go banking on that extra 0.1% of interest if I were you.

Get 4% from a shorter ISA

You don’t actually have to lock your cash up for as long as two years to secure a rate of 4% on your money though.

Cheshire Building Society is offering 4% on its 18-month ISA, miles ahead of its rivals. There are two potential downsides to the account to bear in mind though. Firstly, you’ll need £1,000 to open the account. And secondly, the Cheshire ISA doesn’t accept transfers from old ISAs. So if you’re a seasoned ISA saver, this is not really for you. But if you’re a newbie to ISA saving, this is a hell of an offer!

If you really don’t want to let your money get out of arms’ reach, then these are the best short-term  ISAs.

As you can see, you do sacrifice a fair bit of interest for the sake of having your money in a one-year ISA rather than a longer account. The advantage of going with a shorter deal is that you’ll be able to move your money to a (hopefully) even better deal in a year or two when the base rate starts rising.

The trouble with that theory is that the base rate doesn’t look like moving any time soon. Indeed, as we highlighted last week, some economists don’t think it won't move much, if at all, until 2015.

Personally, I’d be inclined to go for a two-year ISA. It’s long enough that you’ll get a much better rate than from a one-year deal, but not so long that you are likely to get caught out by rising base rate.

What do you think? Which ISA are you going for this year and why?

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