Spotlight: Nationwide four-year fixed-rate ISA

Simon Read
Saturday 27 March 2010 01:00 GMT
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The deal

Agree to fix your cash ISA rate for four years and you'll get tax-free interest of 4.25 per cent.

The good points

You won't find many other ISAs paying such a high rate at the moment, only Halifax offers the same rate among ISAs that allow cash to be transferred in from existing ISAs. The minimum investment is £1.

The bad points

Fixing your rate for four years could be a mistake. Experts expect the base rate to start rising this year and savings rates should follow. By 2014 there could be far better deals available. If you want to withdraw cash before the end of the four years, you'll be charged 320 days' interest.

Conclusion

Nationwide is making a late attempt to attract ISA cash but don't be swayed by the headline rate. Tying yourself into a long-term fixed rate could mean losing out on better offers in the next 48 months. If you want a good rate with flexibility, Leeds Building Society pays 3.5 per cent fixed over three years and 4.6 per cent over five years, but allows you to withdraw up to a quarter of your cash with no penalty.

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