ISA 'price is right for first-time savers'

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ISA 'price is right for first-time savers'

Tue 28th Apr 2009

Individual savings accounts (ISAs) may offer the best deal for first-time savers, according to one financial expert.

Kevin Mountford, head of banking at moneysupermarket.com, said that the interest rates offered on some ISAs are more competitive than those of conventional savings accounts.

Moneysupermarket.com's current best buy ISA, the first direct Regular Saver ISA offers seven per cent interest, whereas the current best buy regular savings account, Barclays Monthly Savings Account, offers six per cent.

Mr Mountford added: "[An ISA] works just like a regular savings account so you can stash your cash away in small monthly increments, but the rates on offer can be far more competitive and you don't pay any tax on your returns."

ISAs allow savers to earn tax-free interest on a certain amount of savings every year.

Recently, the chancellor announced that the threshold for tax-free savings on ISAs will be increased from £7,200 to £10,200 next year.

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