Cheshire latest to offer 18-month cash ISA

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The Independent Online

Cheshire Building Society is the latest provider to offer an 18-month individual savings account. The Direct Fixed Rate Issue Three pays 4.05 per cent tax free on balances of at least £1,000, comparing favourably to the market-leading one and two-year cash ISAs which pay 3.5 per cent and 4 per cent respectively.

"Traditionally, the fixed rate ISA market has offered full-year terms between one and five years, but we're seeing extra flexibility and choice, with a few providers now offering the option of 18 months," Andrew Hagger from comparison site Moneynet said.

But, he added, there are drawbacks with the Cheshire product: "The main downside is that it doesn't permit transfers in, something that has been an annoyingly common feature in the past few years with some of the best-buy deals. It must be frustrating for consumers who would rather keep all their ISA cash in one basket.

"The maximum £5,340 will earn you a tax-free sum of just over £321 over 18 months, but there's no early access unless you want to lose 180 days interest," Mr Hagger added.

Savers have until the end of the month to invest this year's ISA tax free allowance.

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