Fancy fixing part of your ISA allowance while keeping the rest in an easy access account? Take a look at this deal.
Having your cake and eating it too is a rare occurrence in the world of savings. In fact, looking at the state of current interest rates, you’ll be lucky to get your hands on a metaphorical muffin of a savings account, never mind a full blown cake.
But one building society does offer an ISA service with something of a different flavour.
MaximISA
The MaximISA from Newcastle Building Society allows you to take your cash ISA allowance (now £5,640) and share it among several of its accounts. You can also transfer any existing ISA balances across and use it in the same way. This allows you to stash some in a flexible easy access account and some in a higher paying fixed term account. And all the returns will be tax free!
The service is unusual as you are not generally allowed to split your cash allowance. But while the MaximISA gives you separate accounts and account numbers, the building society will bundle your ISA holdings under one unique reference number when it comes to reporting to HM Revenue & Customs.
So what potential homes does the Newcastle have for your cash?
The rates
Here are the five accounts offered by Newcastle Building Society. You can split your allowance across any number of them…
|
Account |
Rate (annual gross) |
Minimum |
Access |
Allows transfers in? |
Need to know |
|
Sir Bobby Robson Foundation ISA |
2.60% |
£1 |
Penalty free, easy access |
Yes |
BS pays additional 0.10% of the balance to Sir Bobby Robson Foundation |
|
Fixed Rate Options ISA – one year |
2.70% |
£500 |
One year term – withdrawals subject to 30 days loss of interest |
Yes |
|
|
Fixed Rate Options ISA – two year |
2.85% |
£500 |
Two year term – withdrawals subject to 60 days loss of interest |
Yes |
|
|
Fixed Rate Options ISA – five year |
3.30% |
£500 |
Five year term – withdrawals subject to 120 days loss of interest |
Yes |
|
|
The Newcastle Big Home Saver ISA |
3.00% (AER) – includes 1% bonus payable in each month you make a deposit but not a withdrawal |
£1 minimum per month (£500 maximum per month) |
Lose the 1% bonus rate every month you make a withdrawal |
No |
Save £5,000 - £9,999 and then take a mortgage with Newcastle BS & get a £500 reward. Save £10,000+ & take a mortgage & get £1,000 reward. |
The ‘Sir Bobby Robson Foundation ISA’ is the Newcastle’s easy access offering. It pays out at 2.60% with a minimum balance of £1. There are also one-, two- and three-year fixed term accounts on offer. They all have a minimum investment of £500 and rates of 2.70%, 2.85% and 3.30% respectively.
The Newcastle Big Home Saver ISA is geared towards new home buyers who are savings for a deposit. You will earn 3% every month you pay in between £1 and £500 and make no withdrawals. If you make a withdrawal the rate for that month drops to 2%. You will also earn a cash reward if you put the saved amount towards a deposit on a Newcastle BS mortgage. If the final balance is between £5,000 and £9,999, you’ll receive £500. If it is over £10,000, you’ll get £1,000 back.
How do the rates shape up?
Well, to put it bluntly: the Newcastle rates are not the most competitive on the market.
[SPOTLIGHT]For easy access accounts Coventry BS leads the way with its 3.15% online saver ISA, followed by ING Direct at 3.10% and Santander at 3%. A good deal higher than the 2.60% on Newcastle’s Bobby Robson ISA. However it is worth pointing out that the Coventry, ING and Santander deals do all come with temporary bonuses that will see your rate tumble after 12 months. The Newcastle account has no such bonus – giving you a little more reassurance that your rate will stay put for longer.
It’s a similar story for the fixed term accounts. The one year 2.70% Newcastle account is trumped by Santander’s 3.50% Fixed Rate – though the minimum deposit on this account is £2,500. Alternatively Aldermore’s one-year deal pays out at 3.30% with a minimum of just £1,000.
BM Savings’ two-year fix at 4.05% (minimum deposit: £500) wallops Newcastle’s 2.85%, closely followed by Santander's 4% paying Major ISA. The Spanish bank’s unique account has a minimum investment of £1 and will pay out an additional 0.10% bonus if Rory Mcilroy wins an eligible golf major!
On the five-year front, Halifax offers the best rate: 4.50% on balances from £500. Again, far higher than the Newcastle account.
You are essentially paying for flexibility if you opt for the MaximISA. This could be useful if you need to get at your cash quickly, but still want to take advantage of higher fixed term rates.
Likewise, opting for an instant access or short term fixed account, along with a long term fixed account will allow you to reinvest part of your cash when the base rate eventually rises and the savings market picks up.
Bank of Cyprus JISA
The only other account I have seen that follows anything similar to the split allowance model is the Bank of Cyprus’ Junior ISA (JISA). The combination account from the bank allows you to fix part of your JISA allowance at a higher rate and keep the rest in a variable account with 95 days’ notice required to pull the cash out.
If you are already a Bank of Cyprus customer you’ll earn 3.50% on the fixed part of the account and 3% on the variable. If you’re not a customer of the bank, you’ll get 3% on the fixed balance and 2.75% on the variable balance.
Do you have one?
Do you have a split allowance cash ISA? Would you compromise on your rate for this flexibility?
Let us know using the comment box below.
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