Sainsbury’s best catch-free cash Isa rate up to 3.01%

| September 18, 2012 | 0 Comments

By
Tara Evans

07:29 EST, 18 September 2012


|

08:56 EST, 18 September 2012

Sainsbury’s Bank has burst up the best buy table after it pushed up its easy access cash Isa rate from 2.8 per cent to 3.01 per cent for new accounts.

The catch-free rate does not include a bonus, so savers won’t have to switch when the introductory rate ends, and can be opened with balances starting from £500.

The Sainsbury’s Isa, which can be opened and managed online or by phone, accepts transfers and has no withdrawal restrictions.

Savings alert: Sainbury's Bank has pushed up its easy access cash Isa rate to 3.01 per cent

Savings alert: Sainbury’s Bank has pushed up its easy access cash Isa rate to 3.01 per cent

Interest is paid annually and new and existing customers can save up to the maximum allowance of £5,640 a year.

Helen Cook, head of savings at Sainbury’s Bank, said: ‘Our cash Isa pays one of the most attractive rates in the market.

‘It’s a straightforward account for savers who don’t want the complications of withdrawal restrictions, notice periods or short-term bonuses.’

Existing Sainsbury’s Bank customers are able to get the deal but they will have to contact the bank directly and asked to be transfer onto it.

The increase in the rate means that it will now feature at the top of This is Money’s cash Isa best-buy tables.

Sainsbury’s came under fire last month when it axed five of its fixed-rate savings accounts, just one day after they launched.

It said that the accounts were fully subscribed and therefore were removed from the market. This variable rate should stick around for longer, but savers eager to grab it should still act swiftly.

Savings that beat inflation

Inflation figures released today show that the Consumer Prices Index (CPI) fell from 2.6 per cent to 2.5 per cent in August, giving some brief relief for savers.

However, due to tax on savings, to beat inflation a basic rate tax payer needs to find a savings account (excluding tax-free Isas) paying 3.12 per cent per year, while a higher rate tax payer needs to find one paying 4.20 per cent.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said: ‘Although today’s fall in inflation is welcomed, it does not alter the painful truth that in five years, the average saver has seen over £750 knocked off the spending power of their savings, the equivalent of just over £2 for a cup of coffee everyday of the year.’

‘Savers need to be vigilant and take advantage of tax breaks such as ISAs and if they can, lock their money away for a fixed period to ensure better rates.’

On Sunday, Financial Mail launched a campaign for the government to revamp tax-friendly Isas, so they are more appealing to cash savers than investors by having the same limit.

At present investors can stash £11,280 into an investing Isa, while cash savers are limited to £5,640 annually. You can find out more and sign the e-petition here.

Similarly last week Money Mail launched its campaign to ‘get Britain saving again’, as part of its plan it called for similar and fairer Isa accounts.

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