One upshot of the credit crunch is that savings rates are now at their most attractive, so there’s never been a better time to put your pennies aside – available rates on cash mini Isa’s are currently hovering around 6.25-6.5 per cent, the highest they’ve been in recent years.

Also, due to the rule changes which take effect as of today, there has never been a better time for existing savers to cash in – the maximum you can save in cash in an Isa has increased from £3,000 to £3,600.

Because of this, and of the current economic climate, the already highly competitive ISA market has transformed into a veritable snakes’ nest, with financial institutions on all sides fighting for your investment. Some lenders will pay out interest on amounts as little as £1, with others requiring a more substantial deposit of around £1,000 – some banks requiring higher investments of these types are promising to pay out rates of 10 per cent; anyone fancy getting 10 per cent interest on tax free savings?

Despite these favourable investment conditions, customers should, as always, be aware of the T’s & C’s – banks may well promise to cough up a nice interest rate, but only if you agree to keep your money with them for a set period of time or until a set date, agree to pay a switching fee should you want to transfer your Isa funds to another account, or pay in a set amount per month – some will not accept transfers of balances at all. According to results from a survey published in the Telegraph, one in 12 institutions will penalise savers for withdrawals, either by levying exit fees of £30, withholding interest for 30 days’ notice, or charging an admin fee for the privilege.

If you are looking to consolidate existing savings, then look for an Isa which allows you to transfer amounts which exceed the allowance – you won’t be able to take advantage of a good rate if you can’t move more than £3,600 across. For first-time investors, such concerns are less of a worry as, presumably, they have no previous balances to transfer across. However, for those who have regularly invested the maximum cash amount into an Isa over the years will have to look harder in order to benefit from the current rate hikes.

There has never been a better time in recent years to invest in savings, due to the attractive rate being thrown around – just be sure you thoroughly scan the smallprint before signing up and make sure you know what you’re getting.

This entry was posted on Tuesday, April 1st, 2008 at 10:13 am and is filed under Credit, Investing, Savings. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.