Switching to an ISA?

28.07.2005 maxi your mini with first direct's market-leading 6.25 per cent e-ISA
Each year UK savers unnecessarily hand over more than £467 million¹ to the taxman by not saving money into tax-free accounts, according to research from first direct, the UK’s most recommended bank. There are an estimated 30 million² savers in the UK - that’s almost half the population - but just 16 per cent³ (4.8 million) of all savings accounts are held tax efficiently within an ISA.


With the arrival of the new tax year, first direct, the UK’s most recommended bank, is urging the country’s 25 million⁴ deposit account holders to make a new tax year’s resolution by getting in early with their ISA applications. Not only will savers be able to take advantage of bonus rates still on offer, but by switching out of a savings account they’ll also benefit from extra months of tax-free interest payments.
By saving into an ISA, interest is earned tax-free. Savers transferring their full cash ISA allowance of £3,000 into the first direct e-ISA - with the best rate on the market of 6.25 per cent - from a savings account paying an average of 3.09⁵ per cent interest, would see their return increase by as much as 310 per cent a year. Alternatively, savers would need to find a savings account paying as much as up to 10.93 per cent (AER) to match the return of first direct’s e-ISA.
Richard Kimber, first direct’s chief executive said: “No one likes to pay the taxman more than they need, yet 83 per cent of savings accounts are still not held tax efficiently. Not only does our mini cash e-ISA pay the highest rate on the market, but the fact that it can be managed online means that it’s ideal for people living a 24-hour lifestyle.”
first direct’s mini cash e-ISA gives savers a market leading rate of 6.25 per cent, fixed until 6 October⁶, reverting to the current ISA rate at the time. Interest is calculated daily and paid monthly.
¹Based on an average interest rate of 3.09 per cent (source Moneyfacts), and assuming all account holders are lower rate taxpayers.
²Source: MORI July 2004.
³16.2 per cent of savings accounts are held within cash ISAs. Source: MORI July 2004.
⁴There are 30 million savers in the UK, of which 83.8 per cent are estimated to be in deposit accounts. Source: MORI July 2004.
⁵5 Average rate in the UK based on a minimum £2,500 in savings. Source: Moneyfacts.
⁶6.25 per cent (AER) interest is applied to new accounts opened before 6 October 2005.
12/04/2005
The immediate access account's maximum balance is also being raised from £50,000 to £250,000 to allow customers to earn the new high rate on more of their savings. Currently, first direct has three quarters of a million savings customers, holding balances totalling more than £5 billion.
first direct's e-Savings account pays interest monthly on balances from £1 and is managed online at www.firstdirect.com, first direct's award winning website. The account is available to both new and existing customers and is designed for savers who plan to leave their money to grow.
Richard Kimber, first direct's chief executive said: "We think it's time for a better rate and by raising interest on e-Savings, despite the fact that the base rate hasn't risen since last August, we are sending a clear message to savers that first direct is keen to offer a great home for their money."

17/02/2005