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M&S - Advantage Cash ISA
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M&S's Advantage Cash ISA pays a tax free, market leading instant access rate of 3.02% AER/3.1% gross. This includes a 1% AER/tax free bonus payable until 21st April 2010, after which the rate reverts to the 2.10% AER variable.
A £100 opening balance applies; however, the minimum account balance is just £1 so you needn't maintain this.
You can pay in up to the current year's cash ISA maximum (which stands at £3,600) or choose to credit the account with monthly instalments of at least £25 should you wish. However, the Advantage Cash ISA also accepts transfers-in from other cash ISA providers so you can also use it to amalgamate savings from your previous years' allowances.
Additionally, you can withdraw the money penalty free at any time, making it an incredibly flexible option.
The tax free 3.02% AER/3.1%gross paid on this account is the market leading instant access Cash ISA rate and - at the time of writing - beats the interest paid on the vast majority of standard instant access savings accounts currently available too.
The rate of interest paid on this account is variable (although you do have the reassurance of the 1% bonus), however as you can make penalty free withdrawals at any time, you have the option to move your money as and when the return is no longer competitive.
Similarly, by giving you the option to transfer-in savings from your previous years' Cash ISA allowances you're able to make sure that all of your savings are working as efficiently as possible - with the reassurance that you are able to move them without penalty when this is no longer the case.
Due to its flexible terms, low minimum balance and decent rate of interest this Cash ISA is a good all-rounder. It's equally suited to those who are just starting to build their tax free savings and those who have taken full advantage of previous years' allowances.
The ING Direct Cash ISA is a good online alternative, paying 3% AER on balances from £1 and including a 1.47% gross bonus for 12 months from opening. It doesn't, however, accept transfers-in from other providers and does limit withdrawals to 10 per day.
For individuals who have over £9,000 saved from previous years' allowances the Abbey Direct ISA Issue 3 is a good option as it also pays 3% AER and necessarily accepts transfers-in from other providers. However, for those with less than £9,000 invested in previous Cash ISAs a lower rate of 2% AER is available with this account.
Those looking to fix their return can earn up to 3.25% AER with the Northern Rock 1 Year Fixed Rate Cash ISA Issue 109, which accepts balances from £500 and transfers in from other Cash ISA providers. Whilst better returns still are available for those who are happy to tie their savings up for an extended period with longer term fixed term Cash ISA accounts.
While this account can be opened online it can only be managed by post or over the phone which is not going to suit every potential investor.
Also, despite the 1% bonus (payable until 21st April, 2010) the rate of interest paid on this account is variable and so it could drop at any time. This means that you will need to keep an eye on the interest rate to ensure that it remains competitive.
Finally, M&S do offer this account as either a full or partial fixed rate option too. However, while this can be tempting, better returns are available on other 'standard' fixed rate Cash ISAs so it's worth comparing it with the other accounts available before you sign up.