Spotlight: Santander's 3.5% cash ISA

Simon Read
Friday 26 February 2010 20:00 EST
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The deal

Santander and Alliance & Leicester is guaranteeing a minimum rate of 3.5 per cent on its new Flexible cash ISA.

The good points

It pays 3 per cent above base rate for the first 12 months while allowing penalty-free instant access. The minimum amount you need to put in is just £1. Interest in an ISA is paid tax-free.

The bad points

What happens after a year? You'll need to monitor the account to ensure you're still getting a good deal. Sadly, it's only available to a new ISA cash, you can't transfer money that's already in an ISA.

Conclusion

This is the first real move in this year's ISA season along with Nationwide's new Champion ISA, which pays the average of the top-paying branch-based ISAs plus an introductory bonus of 1.35 per cent to give a current rate of 2.5 per cent. But other deals will follow so there's no need to rush to use your ISA allocation as yet.

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