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
  • 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

    Guru Careers: Digital Marketing Exec / Online Marketing Executive

    £35 - 40k: Guru Careers: Our client has a new role for a Digital Marketing Exe...

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Day In a Page

    General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

    'We will not sit down with Nicola Sturgeon'

    In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
    VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

    How ordinary Britons celebrated VE Day

    Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
    They came in with William Caxton's printing press, but typefaces still matter in the digital age

    Typefaces still matter in the digital age

    A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
    Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

    'Missing link' between Earth's two life-forms found

    New microbial species tells us something about our dark past, say scientists
    The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

    Pan Am Experience: A 'flight' back to the 70s

    Tim Walker checks in and checks out a four-hour journey with a difference
    Humans aren't alone in indulging in politics - it's everywhere in the animal world

    Humans aren't alone in indulging in politics

    Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
    Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

    Crisp sales are in decline

    As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
    Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

    Ronald McDonald the muse

    A new wave of artists is taking inspiration from the fast food chain
    13 best picnic blankets

    13 best picnic blankets

    Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
    Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

    Barcelona vs Bayern Munich player ratings

    Lionel Messi scores twice - but does he score highest in our ratings?
    Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

    Explosive batsman who sets the range for Kiwis' big guns

    Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'