Principality launches 5% regular saver ISA

Principality Building Society has kicked off the new ISA season with a regular saver ISA paying a market-leading 5.00% AER tax free, fixed until 5 April 2010.

The launch (Monday 6 April) comes as research by Principality reveals that two thirds of savers are throwing money away by not having a tax-free ISA.

Principality's research found that although 84% of people say they have a monthly savings account, only 28% of those surveyed have an ISA - equal to a third of the total number of savers surveyed.

Principality's regular saver ISA helps people make the most of their ISA allowance by encouraging them to save regularly by giving them an interest rate of 5% fixed for a year, providing a guaranteed tax-free return.

To qualify for the ISA, savers need to make a regular monthly investment from as little as £20 up to a maximum of £300, paid by standing order. Principality suggests that savers set up their standing order to pay in to the ISA at the very beginning of each month so they maximise the interest they earn, which is calculated on a daily basis.

For added flexibility, if savers do not make the maximum £300 per month investment, they can still top up their ISA in March next year up to the £3,600 maximum limit, so they can benefit from their full tax-free savings allowance.

James Wright, Marketing Director of Principality Building Society, says: "ISAs have always been a must-have for every saver, but with the current low-interest rate environment they make more sense than ever before, so it is worrying that many people are unaware of the tax-free benefits of an ISA.

"The danger of ordinary savings accounts that pay hardly any interest at all is that people won't bother to save. That's why Principality has created an ISA that rewards regular savers with a market leading rate and a guaranteed income - tax-free. Plus savers get the option to top it up at the end of the ISA year and maximise their ISA allowance."

The initial deposit can be made by cash or cheque, but the following 11 months' payments are made by standing order. Top-ups can be made by cash, cheque or standing order.

Principality's savings research found that:

84% have a monthly savings account
28% have an ISA (equal to 33% of total number of savers)
21% don't know what the main benefit of an ISA is
68% know that the main benefit is that interest is paid tax free

Further information is available online at principality.co.uk