Tax-Free Savings Survey: It's a jungle out there; but you're safe in the post office

CASH ISAS have taken the lead in attracting most of the public's savings during these early days of the new tax-free investment regime. Not surprising, given the amount of advertising that was being done by the banks and building societies over the last couple of months.

They offer some very attractive interest rates on their new accounts many of which are CAT-marked. In the case of cash ISAs, this amounts to having no one-off or regular charges, a minimum transaction size of no more than pounds 10, with ease of access so that withdrawals can be made in one week or less.

On the terms front, the interest rate offered has to be no lower than 2 percentage points below base rate and must follow any increase in base rate within a month although they may be slower if rates fall.

Along the high street, in the first two months of the new tax year, banks and building societies are already boasting about their success in the market place. With their hundreds of branches and millions of customers on their mailing lists, it is not surprising to see them doing well.

But when it comes to the number of outlets offering cash ISAs, National Savings which has an outlet in the country's 19,000 post offices, swamps them all.

And while Britain's second largest savings institution (the Halifax is the largest) may not be offering the top rate of interest for deposits, it is none the less offering a competitive rate of 5.75 per cent tax free.

This is equivalent to 7.2 per cent for a basic rate taxpayer and 9.4 per cent to anyone paying the higher rate of tax.

"When we announced our CAT-marked ISA in mid-March, ahead of most of our rivals, we set out with the intention of making National Savings a part of every investor's portfolio," says Chris Moxey, commercial director at National Savings.

"We made it very easy to open an account, whether it's for lump sums or regular savings. Every post office branch can take deposits, they can be opened over the telephone or by letter. We even have an Internet site with all the relevant information in plain English, although until the rules are eventually announced for e-commerce signatures, you cannot open an ISA through the website."

National Savings guarantees that the rate it offers will not fall below base rate at any time during the current financial year. The minimum deposit is pounds 10, and up to pounds 3,000 can be invested in the first year, pounds 1,000 thereafter. Money can be withdrawn at any time without notice, although any taken out of an ISA cannot be replaced later on.

During the first two days that ISAs were available for purchase, 10,000 new accounts were opened with National Savings. It has now attracted over pounds 100m from the public.

While those prepared to invest over pounds 1,000 up to the pounds 3,000 maximum may get better deals elsewhere, for the small saver - very much the type of person that the Government had in mind when it introduced ISAs - the National Savings cash ISA is an attractive package.

In fact, only a few financial institutions offer a better ISA deal. Nationwide is offering one of the best deals paying 6.5 per cent tax free for a minimum deposit of pounds 1, with a guarantee that the rate of interest paid will be at least 1 percentage point over base rate until October and at least equal to base rate for the rest of the financial year.

Others, including Abbey National, Britannia Building Society and the Woolwich, are paying 6 per cent free of tax for a minimum deposit, usually between pounds 1 and pounds 10.

National Savings on 0500 500000

Suggested Topics
News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
News
news
Life and Style
Jack Cooksey goes for the grand unveiling - moments before dropping his new iPhone 6 on the floor
iphone launch
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Life and Style
ebooksFrom the lifespan of a slug to the distance to the Sun: answers to 500 questions from readers
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Primary Supply Teacher - Loughborough

    £90 - £120 per day: Randstad Education Leicester: Are you a Teacher looking fo...

    Primary General Cover Teachers

    Negotiable: Randstad Education Leicester: Are you a Newly Qualified Teacher lo...

    Part Time Primary Teacher

    £90 - £120 per day: Randstad Education Leicester: Part Time Primary TeacherOur...

    Science Technician

    £7 - £8 per hour: Randstad Education Cheshire: The Job:School Science Technici...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week