Spotlight On: Leeds' guaranteed ISA

The deal

Leeds Building Society is offering Bank of England Base Rate plus 2 per cent for 2 years on a 2010-2011 tax-free cash ISA.

The good points

Linking your savings to the Base Rate could prove a good idea if rates rise, as some experts are now predicting. The minimum balance is £1 but you can put in up to the current year's cash ISA allowance of £5,100 as well as transfer savings from previous years' ISAs.

The bad points

Your cash is locked away for two years and you'll lose 120 days' interest if you need it earlier. If interest rates don't rise, your money could end up being locked away until 2013 in what could prove a poor-paying account.

Conclusion

This is not the first account to try and lock savers in by preying on their fears of an interest rate rise. The CBI predicts rates will hit 1.25 per cent by the end of the year, which would leave this account paying 3.25 per cent. By then, however, there could be better ISA deals which you could switch into from a general ISA with no penalty.

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

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