Saffron launches 7% ISA

| February 23, 2009 | 0 Comments
Saffron launches 7% ISA

Saffron Building Society has launched a cash ISA paying interest at 7% AER for 12 months.

Saffron’s new deal is only available via post or in-branch, and requires a £25 up front deposit to open the account.

To qualify for the 7% interest rate, savers must deposit between £25 and £300 per month into the account. If a monthly payment is missed, interest will revert to Saffron’s Easy Access ISA rate, currently just 0.85%.

Savings from previous year’s ISAs cannot be transferred into the account for the first 12 months.

As with all ISAs, the account has a maximum yearly limit of £3,600.

Instant access for withdrawals is offered at no penalty.

Saffron’s 7% ISA is compared to figures from the Bank of England showing an average ISA interest rate of 1.38% at the end of January. In January 2008, the average ISA rate was 5.06%.

Although 7% is one of the best ISA rates currently available, the interest paid on the account is limited by the restriction on monthly payments.

Because monthly payments into the account are limited to £300, the maximum interest that can be earned in 12 months is £136.50 - equivalent to 3.8% on a £3,600 lump sum deposited at account opening.

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