Last days to set up ISA allowance

It’s that time of year again – when the deadline for last year’s ISA’s allowance comes up and is gone forever.

To be part of this year’s allowance, the transaction will need to be completed by 6 April 2010.

However, due to the Easter Bank Holiday, savers and investors only have until Saturday 3 April to do this.

Therefore if you haven’t already put your ISA money away, you have only days to get the situation addressed.

According to CityWire, the following are the best ISA’s currently on the market:

Leeds Building Society ISA – five-year fixed rate paying 4.6%
Nationwide Building Society cash ISA – five year fixed paying 4.25%
Saga at 3.9%
Coventry Building Society – one-year fixed rate at 3.25%
Santander Flexible ISA – 3.2%
Barclays Golden ISA – 3.10%.
Cheltenham & Gloucester – two year fix at 3.5%
Post Office – one-year fixed-rate at 3%

Filed under: Savings, ISA

The fundamental change in savings

The way people save has undergone a fundamental shift, but not a lot of people have noticed the change.

Traditionally, savers would put their money away into a savings account, where the interest rate would be reasonably competitive, could vary from time to time, with higher rate accounts offering higher returns the less you touched your money (ie, notice accounts).

Those people with a lot of money to save would often look to save their money in multiple accounts with multiple savings providers, and those in the higher income bracket saving into an offshore bank account.

While there were additional savings options for tax-free interest, such as TESSA’s, PEP’s, then ISA’s, and variations on savings such as the premium bonds, that was as complicated as it got.

Those who did not want to invest in stocks and shares, mutual funds or index funds, futures, bonds, or other investment vehicles as part of a portfolio, remained just savers.

What has happened since the financial crisis impacted is now those savers have become investors, without realising it.

Savings rates have been slashed as the Bank of England dropped central banking rates through the floor to the record lows of 0.5% – with both current account and savings account rates following suit.

The result? Most current accounts now pay 0% interest, and savings accounts rarely offer more than 1.5% .

However, many savings providers are now offering higher rate savings through fixed rate bond accounts, where interest rates can be 4% or more above the Bank of England’s base rate, so long as you lock you money in to the account for two, three, or five years.

The result is a major change in the savings landscape that few have even noticed, as savers are now finding themselves forced into putting their money into bonds for a fixed term. In effect, they are now investing in investment products, rather than saving in savings products.

The surprise is that only a few savings and investment brokers have noticed this change.

While some commentators have suggested that 2009 saw the growth of green shoots in the economy, others remain adamant that we are looking at a W shaped recession.

Either way, it looks like the savings landscape is not going to change any time soon, and that fixed term plans will continue to force savers to become investors in all but name.

Filed under: Economy, Savings, Economy, investments, Savings, uk