A provider of savings accounts specialising in the over 50 crowd has recently made waves with a new 3.6 per cent cash ISA launch, soaring to the top of the fixed-rate one year savings tables, experts say.
Personal and business bank account provider Saga, an over-50s savings specialist, came out with the high interest rate ISA recently. However, industry experts have pointed out that while the 3.6 per cent rate of return is a best buy, many savers will be discouraged to learn that transfers in from past years’ ISA balances is not permitted.
In order to be eligible for a Saga account, savers must be over 50 years of age. The ISA allows withdrawals, provided the saver is prepared to forfeit 90 days’ worth of accrued interest, and if savers want to use their unspent 2011-2012 tax year allowance, they must submit an application before March 29 and make a deposit before the April 5 tax deadline. The cash ISA, which is managed by post, will accept applications made on March 30 or later, but these will be applied towards the coming tax year that begins on April 6.
While this fixed-rate return does place the Saga deal in a competitive position, experts say that choosing a one-year fix over an easy access deal is a poor decision. There are many easy access ISA savers that offer matching or similar interest rates, yet allow savers to withdraw their cash without penalty.
On top of that, savers under the age of 50 obviously need to find an alternative to the Saga deal, which has industry insiders saying that the deal is unlikely to prove terribly popular in the end.