AA Savings fires new salvo in the easy access cash ISA wars

A new salvo was fired in the easy access cash ISA wars, this time from a new 3.5 per cent interest rate deal from AA Savings.

The new deal boasts the highest available rate today, as it is a full 0.15 percentage points over Cheshire Building Society, the last financial services provider that held the top spot.  However, there is more than one caveat for savers that may be eager to jump ship for this newest offering, such as AA Savings requiring at least a minimum £2,500 opening balance and a refusal to allow transfers in of existing ISA savings pots.

In addition to these limitations, the new AA Savings deal carries a 3 per cent bonus rate for the initial 12 months of the product.  This means that savers that do not want to be left with a paltry 0.50 per cent rate of return after the initial year will need to shop around for a better deal in just one short year.

Nevertheless, industry experts say that the AA Savings offering could become quite a popular choice for savers looking for a home for their ISA allowance of £5,340 before the 5 April deadline.  From the following day, which starts the new tax year, savers can then top up their ISA with an additional £5,640, the allowance for 2012-2013.

However, based on the many limitations that come with the AA Savings deal, some industry insiders have said that the new deal may not be for everyone.  Any savers with substantial ISA savings pots built up over a number of years will find the offering useless, as will those with little cash to devote to savings – leading many to choose competitors’ products instead, even if the rate of return is less.

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