Harried savers who have yet to use up their deposit allowance for the 2011 tax year now have a new 3.05 per cent interest rate best buy ISA to consider as a home for their hard-earned cash.
The new online savings product, from AA Savings, is 0.2 percentage points above the former top ISA. However, this represents just an additional £10.68 over the next 12 months on a deposit of £5,340 which is the maximum allowance.
ISA savings rates have been dropping precipitously from May’s 2.61 per cent average. Many ISAs were paying in excess of 3.3 per cent only a few months ago, but now the personal and business bank account provider that is offering the next best rate after AA Savings is West Bromwich Building Society, with its 2.85 per cent offering.
Moreover, 1.35 percentage points on the AA Savings offering is a bonus rate, which will leave savers with a 1.7 per cent rate after that point. Savers that wish to maximise their return will most likely transfer their funds to a new account at that time in order to avoid losing out on a more lucrative deal.
The AA account is also limited in that it does not allow balance transfers from older ISAs. The minimum deposited needed to open the account is £500, though savers face no penalties on accessing their cash for withdrawal.
Industry experts say that the AA Savings offering is a good choice for a saver that is just starting out with ISA saving. Active savers instead should look for an offering that allows transfers, in order to maximise their interest, and as you cannot exceed your yearly ISA allowance, many existing savers will be automatically barred from taking out the new best buy.