Egg launches new cash ISA

Egg has launched a new mini cash ISA paying 6.05% gross p.a./AER variable, which customers apply for via the internet with just £1.

Savers can use a variety of deposit methods, including debit cards and direct debit to save up to £3,000 each tax year into their account. In contrast to some other high-interest cash ISAs, it does not come with restrictions such as only being available to existing customers. The Egg Cash ISA allows customers to make minimum withdrawals of £1 with no notice period.

Mike Monk, Head of Savings & Investments, Egg said: “Our new cash ISA offers a very competitive rate of interest with no catches. There are a number of attractive headline rates in the market, but savers need to be aware of the conditions associated with many of these products. Some rely on short-term bonuses to boost their headline rate and others act as a carrot to entice people to invest in other products. With our cash ISA, we wanted to not only provide an attractive headline rate, but also be transparent in our offering and make it easy for people to open – the online application process takes just minutes. Hopefully, this will encourage more people to take out a cash ISA early in the new tax year and take full advantage of a highly competitive and tax-free interest rate.”

The first point for anyone with savings is to ensure that they use as much of their annual cash ISA allowance of £3,000 as possible to maximise the tax breaks available.

When choosing a cash ISA, customers should consider the following:

1. To help ensure that you take full advantage of your tax-free allowance, try and open your cash ISA as soon as possible in each tax year. Opening an Egg cash ISA with the maximum subscription of £3000 on 6th April this tax year as opposed to 5th October could mean that you generate over £90 in extra interest.

2. Shop around. Interest rates vary greatly amongst ISA providers.

3. Check the minimum balance allowed. Not all cash ISAs will allow an account to be opened with just £1.

4. Check how easy it is to get your hands on your savings. Some cash ISAs put a limit on the number of withdrawals that you can make.

5. Check the terms and conditions carefully. Some cash ISAs rely on a large initial bonus to offer their headline rates but once these expire interest rates can drop significantly. Other cash ISAs are only open to people if they have a current account with the provider or if they invest in another one of their products.