A burst of new ISA accounts have hit the market offering savers more ways to take advantage of their tax free allowance before April 2013.
Savers now have just under seven months left to take full advantage of their tax-free cash savings allowance (currently £5,640) for 2012/2013.
Unfortunately, those who missed out at the beginning of April will now have to suffer less spectacular rates and fewer products to choose from. According to financial information website, Moneyfacts, at the peak of ISA season in May there were 499 products, but now there are only 380 available. And the average rate has fallen from 1.93% to 1.86% in that time.
However, there has been a surge of activity over the last few weeks with a range of new ISAs available. Leeds Building Society, Nationwide, Clydesdale Bank and Yorkshire Bank have all launched products within days of each other.
But are any of them offering anything worth going for?
Leeds BS bonus ISA
Last week Leeds Building Society launched a bonus ISA offering 3% on savings.
The account will pay a variable rate of 1.3% plus a fixed 1.7% bonus for 12 months. You only need £1 to start saving and an account can be opened by post or online.
During the bonus period of 12 months, two withdrawals or transfers can be made without notice or loss of interest. From 1st October 2013 there are no restrictions on withdrawals, but bear in mind that the rate is likely to plummet once the bonus is gone so you may want to move your pot onto a better deal.
One downside to the account is that transfers in of previous years' ISAs are not allowed. But as far as rates go 3% is highly competitive compared to similar accounts around at the moment.
Manchester Building Society currently holds the top spot for instant access cash ISAs paying a rate of 3.06%, which includes a 1.05% bonus for 12 months. The minimum deposit is £1,000 but the account does allow transfers of previous year’s ISAs.
However, if you are prepared to give a bit of warning before making any withdrawals notice accounts are a far better bet than instant access options right now.
The Coventry Building Society 60-Day Notice ISA pays 3.25% (including a 0.5% bonus). You can open this account with just £1, but no transfers are allowed. West Bromwich Building Society has the second best buy, paying 3.18% (including a 1.66% bonus) that allows transfers and requires the same minimum deposit of £1,000 and 60 days’ notice on withdrawals.
Clydesdale and Yorkshire Bank’s one-year fixed ISA
Clydesdale Bank and Yorkshire Bank have also launched an ISA that pays 3%, but on a fixed rate one-year bond, meaning no access to your money for a 12 months.
The account allows transfers in from other providers, though you will need at least £2,000 to open one.
The rate is fixed until October 2013. It will pay to remember this anniversary as both Clydesdale and Yorkshire will reinvest the money for you unless instructed otherwise.
The rate from Clydesdale and Yorkshire is good, but it isn’t the best you can get at the moment. Currently Metro Bank is offering a one-year fixed cash ISA paying 3.25% that allows transfers and only requires a minimum of £1 to open.
Whatever you decide to go for, you should move quickly. According to Moneyfacts, the fixed rate bond market has seen rates reduced steadily over the past few weeks.
This is exemplified in the last roundup of ISAs we did in the best Cash ISAs right now, where Julian Hodge Bank topped the table for a one-year fixed rate ISA paying 3.35%. One month on and that rate has been slashed to 3.20%.
Nationwide’s irregular shaped deals
Nationwide has also unveiled a bunch of new ISAs spanning irregular periods.
The shortest is a nine-month fixed rate ISA which pays 2.51% on anything between £1 and £24,999 or 2.61% on anything over £25,000.
Next up is a 13-month fixed rate ISA that earns 2.8% on a balance between £1 and £24,999 or 2.9% on balances over £25,000.
Lastly there is now a 22-month fixed rate deal available to existing ISA customers paying 2.9% on balances between £1 and £24,999 or 3% on balances over £25,000.
Withdrawals are not permitted on any of the new accounts but transfers are welcomed.
Personally, I don’t think these rates are competitive enough. The nine and 13-month offers pale in comparison to rates available on instant access, notice and one-year fixed rate ISAs. The 22-month deal exclusively for Nationwide customers also falls short of better offers like the 18-month fixed rate ISA from Principality Building Society paying 3.33%.
Why now?
So what has prompted a surge of activity in ISA products nearly halfway through the tax year?
Charlotte Nelson from Moneyfacts thinks it has to do with some ISAs maturing in the coming weeks so providers are hoping to retain and win customers with an attractive rate.
But with the new rates remaining conservative at around the 3% mark it’s best to shop around for a new home for your savings.
Act now
If you haven’t already set up a tax free savings account and taken advantage of your allowance for 2012/2013 time is running out.
Rates have dived after ISA season and will continue to drop so grabbing hold of a good deal now will see your savings through until they pick up again next year.
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