Principality launches new two year fixed-rate ISA

Principality Building Society has launched a two year fixed-rate ISA paying 3.30% AER tax-free, making it one of the most attractive ISA rates on the market for customers who have not used this year's tax allowance.

As the April ISA deadline nears, Principality urges savers without an ISA to make the most of their tax-free allowance by investing any amount between £500 and the annual limit of £3,600 in its new fixed-rate ISA.

The new ISA comes as Principality reveals a big increase in the number of fixed-term accounts opened in 2008, almost trebling from 44,000 in 2007 to 108,000 last year. This mirrors the UK picture where shell-shocked savers are opening more fixed-term savings accounts as they look for security and a decent rate of return for their money.

Data sourced from CACI shows that in 2008 30% of all new savings accounts opened in the UK were fixed-term products, more than double the percentage of all UK fixed-term savings accounts held at the end of 2008. Savers in Wales and the South West led the drive, with a third of all new fixed term savings accounts in 2008 opened in those regions.

James Wright, Marketing Director of Principality Building Society, says: "With a tax - free interest rate of 3.30% AER, this is one of the best ISA products on the market. The ISA deadline is fast approaching so this is the perfect opportunity for savers to take the cash they have in ordinary low-interest accounts and put it in an ISA that will give them an excellent return on their money, guaranteed.

"The growth in customers opening up fixed-rate accounts with Principality shows that savers want a better return for their money as interest rates hit record lows. But people are also moving their cash to providers that they have more confidence in, such as Principality. The new fixed-rate ISA offers the best of all worlds - so if you haven't used your tax-free allowance this time there is still time to maximise your return."

According to the CACI data, the biggest take up of fixed-term accounts in 2008 was found in Wales, where 33% of savings accounts opened last year were fixed-term products, 19 percentage points higher than the overall savings figure of 14%. Close behind was the South West, where fixed-term products also accounted for 33% of new savings accounts, 18 percentage points higher than the overall figure for the region of 15% at the end of 2008.

However, the biggest shift was seen in the West Midlands where 32% of new accounts in 2008 were fixed-terms products, 20 percentage points higher than the overall savings picture for the region at the end of last year.

Principality's two year fixed-rate ISA pays 3.30% AER tax-free and is open to investments of between £500 and £3,600. Transfers in are not permitted and no withdrawals are permitted prior to maturity. Interest is calculated daily and paid annually on the anniversary of account opening.

Savers can apply to open an account by visiting principality.co.uk/ISA