Beat the Taxman (Nationwide Building Society ISA)

Member Name: west_jenn

Product:	Nationwide Building Society ISA
Date:	04/08/02 (2437 review reads)
Rating:

Advantages: easy accsess to your savings, No tax paid on interest

Disadvantages: you have a savings limit for the year

If you're a financial dunce like I am, then negotiating the minefield that is advertising for financial products can be a nightmare. Unit trusts, PEPs, bonus gold accounts it's all very confusing. A lot of my saving goals are short term for the moment, as there is no chance of being able to buy a house in the next five years!

When I chose my ISA I thought about my financial situation. I don't earn a lot of money, so anything that stipulates a £5,000 minimum deposit to start, is out for me. My savings may be meagre, but it's nice to get some interest on them that hasn't been pillaged by the taxman and that is what is so great about ISA's.

ISA stands for Individual Savings Account. These were introduced by the government to encourage people to save, they replaced Tessa's. The big plus is that interest is paid tax free.

Also I don't like the idea of having to lock money away in an account for years and not being able to touch it. This is all very well if you can afford to have a couple of different savings accounts, with varying lengths of notice, then I'm sure it's financially beneficial to you. However, you never know what's round the corner, there may be an emergency new car or holiday you need to purchase. With the Nationwide Mini Cash ISA you have easy access to your cash. There is no limit to the amount of withdrawals you can make and you are not penalised for making withdrawals.

There is an upper deposit limit of £3,000 during one financial year. Otherwise you'd be able to have tons of tax free savings! This limit applies to the total amount of credits during one year. So if you save £3,000 in a year and withdraw £1,000 you aren't allowed to make up the difference. If you go a year without making a deposit you need to complete a renewal form available from your local branch.

There is no limit to the amount of years you can spend saving. I seemed to recall in the
dim and distant days of Tessas, something about 5 year maturity rates. So theoretically you can save £3,000 a year for 10 years and have £30,000 of tax free savings and interest. Although I think that the Chancellor can pull the plug on it at his own discretion.

To open a Nationwide account you need a minimum of £1. Joining forms are available from your local Nationwide branch. You'll need to show two different form of identification one to prove your name (passport,driving license etc) and one to prove your address (a utility bill or a phone bill that isn't for a mobile phone etc). These needs to be 3 months old or less. Don't be like me waiting for ages and then having to come back, because I didn't have enough I.D.

When I did get to join up it was quite painless, took about ten minutes and I was able to open the account that day. The only thing I would reccommend is not trying to open one during the lunch hour if you can possibly help it. The counter staff don't do opening new accounts, so you need to go to the enquiries section of the branch, which runs the risk of being stuck behind someone's long drawn out mortgage problems. I've always found the staff in my local Nationwide branch to be friendly and helpful.

The account is operated by a passbook ( a very nice navy blue with gold writing and they give you a plastic cover to put it in!) and you can deposit and withdraw money using just this passbook. You don't get a Link card, so you can't money out of a hole in the wall. Not like my old post office account where I'm sure a whole wad of forms were needed to do anything.

The passbook keeps a running total of withdrawals, deposits and balance. Unlike a lot of financial products, you don't need to give notice of your intention to withdraw money. Nationwide sends you a statement at the end of each financial year.

Interest on your account is calculated on the 31st March. The
Nationwide interest rate is currently 4.25%, as of December 2001. Interest is paid for each day your money is in there. So although there is no penalty for withdrawals, it does benefit you if you can keep it in there for as long as possible. So if you put your opinion writing cash in there and keep it in there you'll see the rewards in the interest! Unfortunately since I opened my account, the interest rate has decreased with national trends. Good for mortgages, not so good for savings accounts.

If you're in to internet banking, Nationwide like most financial organisations has a web site www.nationwide.co.uk and you are able to manage your account via the internet. Although you do need to see a human at a branch to set it up. I've had a quick look at their website and it is comprehensive and well laid out.

Another important point is that you are only allowed to have one ISA, I presume there are ways of checking this. Obviously if this weren't the case lots of people would have a collection of different ISA accounts and would all be paying no tax on their savings.

There are other kinds of ISA's available from Nationwide, but these involve investing in stocks and shares.

In short the Nationwide ISA is a great way to get the best return on a relatively small amount of cash.

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