Bank of Cyprus launches cash ISA Bond

The Bank of Cyprus has announced the launch of a new cash ISA Bond, with a fixed interest rate of 3.20% AER until 5 April 2010 if the lump sum is invested by 3 April for this tax year, and between 6 and 30 April for tax year 2009/10.

The ISA Bond will be open for savers from 16 March 2009.

By operating the ISA as a bond with a fixed interest rate, the ISA can deliver a competitive rate of interest without fear of fluctuating rates, common with many mini cash ISAs.

Key features of the new ISA Bond are:

Interest rate fixed until 5 April 2010
You can deposit any of your unused ISA allowance for 2008-09 (up to 5 April 2009)
You can deposit your ISA allowance for 2009-10 (from 6 April 2009)
You can transfer over any ISA deposits held at other institutions from previous years

Tony Leahy, Head of Communications at Bank of Cyprus, said: "Consumers are looking for reliable savings products which are not subject to base rate fluctuations. This new cash ISA Bond provides peace of mind to savers who want a safe haven to take advantage of their tax free allowance, but not lose out to falling interest rates.”

“With interest rates on savings products falling across the board, we are responding to our customers’ demands for a tax free savings vehicle paying a good rate of interest”.

Commenting on this launch, Andrew Hagger of comparison site Moneynet.co.uk, said: “With the rate on some variable ISAs likely to be trimmed further on the back of the 5th March base rate cut, a 12 month fixed rate deal makes a great deal of sense in the current climate.

“You can obtain 0.15% more in the ISA market if you’re prepared to lock in for four years, but with savings rates nearing the bottom of the trough, you would have to question whether this would be a wise strategy.

“This ISA Bond from Bank of Cyprus UK offers an extremely competitive rate in the 1 year fixed market, and unlike some of the headline grabbing deals, you have the option to transfer in previous tax free balances too.”

For more information or to apply, visit bankofcyprus.co.uk