Money Insider: Barclays weighs in with another decent ISA deal

With a little over three weeks of the current tax year remaining, the new ISA deals are coming thick and fast, although most are offering returns that hardly warrant a mention.

The best of the tax-free savings accounts to appear on the shelves this week came from Barclays in the form of its Golden ISA 2, paying a healthy 3.1 per cent AER. This is the fourth year running that Barclays have offered one of the top-paying instant access variable rate ISAs, however as with the table-topping 3.5 per cent Santander deal, it doesn't offer the facility to transfer in previous years' accumulated ISA balances.

It may be that providers are conscious that offering a combination of a market-leading interest rate and ability to transfer could result in a deluge of applications in a short timeframe which could lead to less than acceptable service levels.

The problem is that even though you can make same-day transfers when transacting online, the method of switching ISA balances from one provider to another is very basic.

Rules from HMRC state that monies must be transferred from the original ISA provider to the new ISA account within 30 calendar days. However due to cost implications, providers don't have an automated process set up by which to facilitate these transfers, and unbelievably in this day and age, the process is very much a manual one.

A customer will approach their new ISA provider and complete a transfer request, which is submitted to the bank/building society where their existing ISA is; that provider then arranges for the account to be closed and a cheque posted to the new bank for the balance.

Because most of the ISA activity is compressed into such a small window of activity, this archaic system becomes even slower, with a rush of applicants chasing best-buy rates, but with insufficient resource provided by the banks, the manual systems are unable to cope with the level of demand.

It is astonishing that much of the ISA transfer process is still completed by hand; unfortunately it's another example of banks putting cost considerations before the needs of customers.

The real downside for savers is that because of these hold-ups they are losing interest. For example, if you had a £3,600 balance, 30 days at say 3 per cent would see you losing £8.87 in interest, but if you had the maximum ISA balance of £43,200 the delay in switching funds will cost a staggering £106.52.

Northern Rock boosts bond rates now 100% guarantee is gone

Following the recent announcement that the 100 per cent state guarantee on Northern Rock savings balances would end on 24 May, it was interesting to see the bank increasing rates on its one- and two-year fixed rate bonds.

Whilst variable rate savers are still fully protected until 24 May and existing fixed rate accounts until maturity, any new fixed rate accounts do not come with this added level of comfort.

The one-year bond now offers the fourth highest rate in that particular category following a hefty 0.4 per cent increase from 2.75 per cent to 3.15 per cent. The two-year bond, which is not quite as competitive, also saw a sizeable increase from 3.2 per cent to 3.5 per cent.

With the removal of the savings guarantee for new deposits, it's not all together surprising to see these substantial rate increases from Northern Rock at a time when a number of short-term fixed rates have been cut or withdrawn completely.

With new fixed rate deposits no longer eligible for the 100 per cent guarantee, the bank now has to compete on a level playing field, and will need to fight for business with competitive rates if it is to retain and grow its savings market share.

It will be interesting to see whether these rate increases will be sufficient to entice customers to remain loyal to Northern Rock with the lesser safety net of £50,000 courtesy of the FSCS, in line with the rest of the savings market.

Savings round-up

Rates for savers of all types are still being eroded, and this week saw the Barclays Monthly Savings account interest rate cut by 1 per cent to 3.25 per cent AER, while the best buy "in credit" current accounts from Alliance & Leicester and Santander saw their 12-month introductory interest rates drop from 6 per cent AER to 5 per cent AER on the first £2,500. They are both still market leaders, however if you always keep your current account in the black and can pay in at least £1,000 per month, the Reward account from Halifax, paying £5 net each month, is beginning to look an attractive longer-term alternative.

Andrew Hagger is a money analyst at Moneynet.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
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 Money & Business

    Guru Careers: Pricing Analyst

    £30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Day In a Page

    Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

    The 161-page dossier that exposes Fifa's dark heart

    How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
    Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

    Exclusive interview with Tripoli PM Khalifa al-Ghweil

    'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
    Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

    Raymond Chandler's Los Angeles

    How the author foretold the Californian water crisis
    Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

    Art attack

    Chinese artist who posted funny image of President Xi Jinping facing five years in prison
    Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

    Cher is the new face of Marc Jacobs

    Alexander Fury explains why designers are turning to august stars to front their lines
    Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

    'I'm climbing Ben Nevis for my daughter'

    Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
    10 best wedding gift ideas

    It's that time of year again... 10 best wedding gift ideas

    Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
    Paul Scholes column: With the Premier League over for another year, here are my end of season awards

    Paul Scholes column

    With the Premier League over for another year, here are my end of season awards
    Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

    Liverpool have seen too much tragedy to forget Heysel

    Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
    Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

    Khan’s audition for Mayweather may turn into a no-win situation

    The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
    Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

    Blundering Blair quits as Middle East peace envoy – only Israel will miss him

    For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
    Fifa corruption arrests: All hail the Feds for riding to football's rescue

    Fifa corruption arrests

    All hail the Feds for riding to football's rescue, says Ian Herbert
    Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

    The Kurdish enclave still resisting the tyranny of Assad and Isis

    In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
    How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

    How I survived Cambodia's Killing Fields

    Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
    Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

    How Stephen Mangan got his range

    Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor