Spotlight: Leeds Building Society's Escalator ISA

The ISA season is really hotting up and among the latest offers is a curious deal from Leeds building Society. This cash ISA pays a tax-free rate of 3.25 per cent over the five year term but customers will receive 2.75 per cent in the first year, 3 per cent, 3.25 per cent, 3.50 per cent and 3.75 per cent in the final year.

There is also a monthly interest version paying an AER of 3.03 per cent. Five years is a long time to put your cash away, especially with rates expected to eventually improve from the current historic lows, but at least this product allows you to withdraw up to 25 per cent of your initial capital without penalty.

The risk with this product is not to get blinded by the headline rate of 3.75 per cent. You won't get this rate for years, by which time interest rates in the wider market could be far healthier. Across five years, 3.25 per cent a year does seem attractive compared with other offers now, but shopping around for the best deal can still reveal rates of 5.5 per cent from the likes of Abbey and Alliance & Leicester.