First Direct's cash e-ISA will pay a guaranteed 3.10% AER on your savings until April 2010 and accepts transfers from other ISAs.
What's the deal?
The First Direct cash e-ISA offers a guaranteed tax-free return of 3.10% AER on your savings until 30th April, 2010.
What makes it great?
While the First Direct cash e-ISA doesn't offer a market-leading AER, it still manages to stand out from the crowd with a flexible offering that guarantees you'll get a good return on your savings for the next 12 months.
Firstly, you have the fixed rate guarantee which gives you the reassurance that any money you invest in this ISA will earn a decent 3.10% AER tax-free until April 2010. With savings rates reaching an all time low, this type of guarantee could prove to be incredibly valuable.
What's more, unlike many of the higher rate options available, First Direct allow you to transfer money into the account from any existing cash ISAs you hold with other providers. They don't place a maximum on the amount you can transfer in and will accept balances saved both during the current 2008/2009 tax year and as part of your previous years' ISA allowances.
More unusual still, they allow you to withdraw your cash free from penalties at any time during the fixed rate period meaning that you can move your money somewhere else at a later date should a more competitive rate become available.
Finally, as the minimum account balance is just £1, it means that anyone can take advantage of the benefits associated with this account.
Who would it suit?
First Direct's cash e-ISA is most suited to individuals who have already contributed to a cash ISA during the 2008/2009 tax year but are no longer earning a decent return on their savings. It gives you the option to move your money to a more profitable home for the forseeable future without losing any of its tax-breaks or restricting your access for the fixed rate period.
What's the catch?
The guaranteed 3.10% return is only valid until 30th April, 2010 after which the rate will drop to 0.5% AER variable so you'll need to make sure you remember to find a better home for your money then.
Transfers to this account from existing First Direct ISAs are not permitted.
What's the alternative?
Natwest's e-ISA offers the best easy-access alternative for cash ISA transfers. It currently pays a tax-free 3.51% AER variable on balances from £1 and although it guarantees to equal or beat the Bank of England base rate until July 2009 it doesn't offer the fixed-rate reassurance of the First Direct option.
For those with a little more to invest there are a number of fixed-term options available that accept transfers from other ISA providers and pay up to 3.51% AER. However, while you do get the reassurance of a slightly higher interest rate for a fixed period, you forfeit the opportunity to move your money if more competitive rates become available.
For individuals who haven't yet used their current tax-year allowance, the best non-tied easy access option is Barclays' Golden ISA which currently offers a tax-free return of 3.61% AER.
However, for those who hold a First Direct 1st Account and haven't yet subscribed to a cash ISA during the 2008/2009 tax year a market-leading 7% AER is available with the First Direct Regular Saver ISA. However, you will need to be willing to contribute at least £25 a month and will be unable to access your savings until the fixed-term of 12 months has passed.
We have done our very best to make sure that the information included in this Deal is accurate. However, sometimes offers can be withdrawn or changed at the last minute so please do check that you're able to redeem this Deal before parting with any money, or going out of your way to take advantage of the offer.
