Best mini cash ISA deal?

Act quickly to get your hands on the best mini cash ISA. That's the message coming out of moneyfacts.co.uk as the financial information provider publishes its 2007 mini cash ISA survey

This year's survey shows the projected value of £3,000 over the tax year 2006 to 2007. Assuming that the full investment of £3,000 was made on April 6th 2006, that no withdrawals were made and that all interest was compounded during the tax year, the survey has yielded some very interesting results, according to Rachel Thrussell, Head of Savings at Moneyfacts.

Alliance & Leicester, this year's clear winner, claims the top spot in the survey with its Direct ISA, returning £3,163.46. A no notice account, the product was launched on January 9th last year with a rate of 5.20%. But this included an introductory offer of a 0.70% bonus, which was swiftly withdrawn on April 12th. Transfers in were accepted, but it clearly demonstrates that investors had to be quick off the mark after the new tax year began if they wanted to take advantage of the product.

Meanwhile, Thrussell notes that National Counties BS and National Savings & Investments' ISAs - in second and third place respectively - are both no notice accounts that provide an attractive return. Although neither allows transfers in, the fact that the top three ISAs are no notice accounts should weaken the long-held belief that on average, notice accounts traditionally yield higher returns.

In 2006, nine out of the top 10 performing ISAs were fixed bonds ranging from one to five years. This year the trend has completely reversed. Indeed, in 17th position is Bradford and Bingley's one year ISA - the highest bond ISA.

That said, Alliance & Leicester's victory is tarnished by the fact it also props up the table with its instant access ISA, returning a meagre £3,109.51. This will without doubt come as good news to Northern Rock, which has held the wooden spoon for the last three years, says Thrussell.

The difference in the top and bottom paying ISA, in this case Alliance & Leicester's products, was £53.95. Although lower than last year's difference of £62.10, it virtually echoes 2005's finding of £53.41.

Thrussell adds that whilst £50 or £60 may not sound like a great deal of money, remember this is calculated on a balance of £3,000, whereas many people will have accumulated tax free cash balances of almost ten times this amount.

The bottom line is to shop around for the best deal.

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2007-03-27 10:26:34 © Moneyextra.com