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

Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
tvPoldark, TV review
Finacial products from our partners
Property search
  • Get to the point
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

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor