ISA season hots up with a number of new launches

With the end of 2011/12 tax year less than a month away, savers are urged to make use of this year's ISA allowance, and check their current ISA rate, as a flurry of new launches means they may be able to get a better rate, according to MoneySupermarket.com.

A number of new cash ISA products have recently been launched, including Cheshire Building Society offering a two-year fixed rate ISA at 4.0 per cent with a minimum investment of £1,000, and The AA launched an easy access cash ISA at 3.50 per cent, which includes a bonus rate of 3.00 per cent; however these do not accept transfers in of existing ISA funds. Santander, Barclays and Halifax have also launched new products ahead of the 5th April tax deadline. Year-on -year ISA rates** are continuing to rise which means those with older ISAs may be sat on lower rates than the current top 10 average of 3.13 per cent.

A recent site poll run by Britain's number one comparison site found two thirds of consumers look for the highest rate of interest offered when choosing a cash ISA. A further twelve per cent are more concerned whether an ISA accepts transfer in. Only two per cent would choose an ISA from their own bank/building society. 

Kevin Mountford, head of banking at MoneySupermarket, said: "We are really starting to see the ISA market hot up with a number of providers announcing new products in the last few weeks. With less than a month to go until the end of this year's tax year, savers should be ensuring they are using their maximum cash ISA allowance of £5,340 where possible to take advantage of the valuable tax free benefits offered. Our research shows, basic rate taxpayers would be £3,800 richer if they had used their full cash ISA allowance each year since they were launched in 12 years ago rather than putting the same amount in an easy access savings account. This rises to £7,300 for higher rate taxpayers. Anyone with a savings pot paying income tax and not using an ISA is throwing money to the tax man.

"Although it is tempting to be attracted to headline rates, it is also clear savers need to look at the finer detail of the product such as whether it offers an introductory bonus or accepts transfers in. As a first step, those with older ISA funds need to be aware of the current rate they are on and switch to a better deal if necessary. It is now very easy to transfer an ISA with many providers paying interest immediately, even before the funds have arrived in the account. However, make sure you follow the ISA switching rules otherwise your savings could lose their tax free status."