Legal and General’s MoneyMood survey found that 64 per cent of Britons were in the mood to save in the month of February, compared with 54 per cent in the same month last year.

Meanwhile, only 24 per cent of respondents were in the mood to spend money - the lowest February figure for three years.

“That is good news as it shows that the majority of households are in a position to save rather than struggling to make ends meet,” commented Claire Stracey, director of customer marketing at Legal & General.

This news has coincided with reports that Fidelity FundsNetwork’s ISA’ sales are up 37 per cent compared with sales in the equivalent period of 2006 - suggesting that as more people are in the mood to make savings, more people are investing in ISA’s.

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This new ISA concept offers investors an inflated interest rate so long as a current account is opened with the ISA provider at the same time as funds are invested into an ISA package.

Meanwhile, deals are often supplemented with bonus interest rates to make the account appear more attractive.

However, these bonus rates are available for a limited time only - most commonly for a 12-month period.

Despite this, Rachel Thrussell, head of savings at Moneyfacts, believes that packaged ISA’s provide savers with an excellent opportunity to secure a high interest rate - even if it’s only a short-term solution.

“If you are happy to open the required current account or take more risk with an equity based investment, then these current rates are unrivalled in the short term,” she said.

“As many ISA’s are freely portable, your relationship with one provider does not have to be lifelong. So why not take advantage of the best rate for this year, and then decide on a new provider next April?”

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The move was confirmed in his Budget, and has been widely welcomed.

However, it has been suggested that the measure is not radical enough, with the Building Societies Association (BSA) calling for a regular limit revision to ensure the effect of inflation is negated.

“An increase in the annual subscription limit to £3,600 for cash ISA’s is good news for savers,” Adrian Coles, director general of the BSA, said.

“The cash ISA has undoubtedly been a success story to date and raising these limits will help build on this.

“Taking this a step further, the BSA would like to see regular future reviews of limits - to prevent erosion by inflation.”

Mr Coles also suggested that Mr Brown should legislate to allow for transfers from stocks and shares ISA’s to cash ISA’s in order to make the ‘lifestyling’ of portfolios easier.

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Rick White, the marketing director of Invesco Perpetual, said that as the current tax year draws to a close, investors should be looking ahead with optimism - particularly with regards to the UK stock markets.

“2006 was an especially volatile year for the stock market, yet the FTSE 100 index still grew by 9.49 per cent over that year,” Mr White said.

“This is a good time for investors to look at their…strategy, both in terms of what they invest in and which method of investing is best for them.”

Mr White was particularly keen to stress that regular savings plans should be considered as an alternative for those without a full £7,000 as a lump sum to hand.

More cautious investors who want to spread out their investment across the tax year could also benefit from this ISA alternative, Mr White added.

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Derbyshire cash ISA

The Derbyshire cash ISA is a variable rate mini cash ISA. The minimum investment is £10, while £10 must be in the account at all times for it to remain open. Presently, the interest rate offered to accounts holding £10 to £9,000 is 5.05 per cent AER. However, if the account holds £9,000 or more an interest rate of 5.1 per cent is secured (for this to occur additional funds must be placed in the account over a number of years). Both rates are subject to change. Withdrawals can be made without notice and without penalty, although transactions must be above £10.

55 plus ISA

To be eligible to hold cash in a 55 plus ISA, applicants must be over the age of 55. However, the rewards for being of an advanced age are obvious: an interest rate of 5.65 per cent AER is currently being offered for all accounts holding more than £10, although from April 6th 2008 this rate will be reduced to 5.25 per cent. However, both rates are subject to change. As with the Derbyshire cash ISA, the minimum account balance and opening account balance is £10, while transactions of £10 or more can be made without penalty at any time.

2 year fixed rate cash ISA

The 2 year fixed rate cash ISA offers a fixed interest rate of six per cent AER until maturity on April 30th 2009. In return for a higher rate of interest - and in contrast to the previous two offerings - the 2 year fixed rate cash ISA has a minimum opening balance and a minimum balance of £1,000. What’s more, although withdrawals and transfers are allowed, a charge equivalent to 120 days’ interest is incurred.

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The new tax beater cash ISA offers an interest rate of 6.5 per cent AER, although this includes a one per cent interest rate bonus only paid in the first 12 months.

It has a minimum investment of £1, and as a cash mini ISA has a maximum investment of £3,000.

The interest rate is payable on all accounts holding more than £1 - in contrast to many ISA’s, where the interest rate is staggered depending on how much is invested in the account.

“This is the best no catches cash ISA rate to hit the high street this year,” claimed Barclays product director Andrew Jones.

“Interest rates have been going up in recent months but until recently the best AER you could get on a cash ISA was below six per cent.”

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The fund, which is managed by Michael Barrie, is available as an ISA investment, for ISA and Pep transfers and for direct investment.

“The success of this fund in both assets under management (AUM) growth and overall return for investors underpins our decision to include commercial property as an asset class available for retail investors (and especially as an ISA investment),” Claire Stracey, director of customer marketing at Legal & General, said.

“Legal & General has a great deal of experience in commercial property investment with over £12 billion currently invested in the commercial property sector for our institutional and retail customers. We believe that demand will remain strong for this tax efficient property investment among investors who are seeking the potential for growth and income in an ISA.”

Ms Stracey claims that a return of 18 per cent was secured for investors in the Property Unit Trust fund in its first year.

The deadline for ISA investments for the current tax year is April 5th.

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Lloyds TSB mini cash ISA

The Lloyds TSB mini cash ISA can only be opened with an investment of £10 or above. However, the more money invested, the greater the interest rate. Account balances of more than £10 qualify for a rate of 4 per cent AER, and a 4.85 per cent AER rate is secured for investments more than £3,000 (this, then, could only apply in the second tax year at the earliest). Sustained investment could see the interest rate reach 5.25 per cent AER if the account holds £21,000 or more.
Withdrawals do not carry a penalty, although they must be made either to a bank account - in which case funds will be cleared after three working days - or will be sent by cheque to a postal address - which takes five working days. Requests for withdrawals must be made by post.

Lloyds TSB fixed rate mini cash ISA

The Lloyds TSB fixed rate mini cash ISA offers a fixed interest rate of 3.7 per cent AER in the first year, although a bonus rate of 1.85 per cent is applicable if no withdrawals are made for the full investment period. However, the minimum opening deposit is £3,000, and after 12 months the account reverts to a regular mini cash ISA. Interest is calculated on a daily basis and paid into the account at the end of the year.

Lloyds TSB Tessa ISA

The Lloyds TSB Tessa ISA is available to existing Tessa ISA holders. The interest rate tier system works in exactly the same way as the mini cash ISA - investments of more than £10 secure rates of 4 per cent AER and the interest rate increases up to the 5.25 per cent AER offered for accounts holding more than £21,000 depending on how much is invested. The withdrawal system is also identical to that available to mini cash ISA.

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A study conducted by Yorkshire Bank ISA’s and Investments has found one in four parents have not prepared adequately for retirement and admit they may be forced to ask their children for help when they reach 65.

However, Gary Lumby, Yorkshire Bank’s head of retail, believes that instead of choosing to rely on their children for financial support, parents should instead be more proactive and start saving for their futures themselves.

What’s more, he believes ISA’s are an excellent way to save, as the money held in the account is exempt from tax.

“Financial advisers would recommend people reaching their 30s should start investing at least ten per cent of their salary into a retirement fund so they can maintain a comfortable standard of living in later life and avoid the need to badger their children for money,” he said.

“By putting this money into a tax-free savings vehicle such as a cash ISA or stocks and shares ISA, you can avoid being taxed twice on your hard earned cash.”

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The Association of Investment Companies (AIC) has warned that many ISA providers have actually imposed deadlines on investments before the new financial year, which begins on April 5th.

This means that many people could find themselves missing out if they do not take note of the closing dates.

“With just under a month to go until the 5th April deadline, investors may think they have plenty of time to make their ISA purchases,” commented Annabel Brodie-Smith from AIC.

“Whilst it’s easy to leave things to the last minute, investors should be aware that many investment companies have deadlines well before then, so it’s important to act now to avoid disappointment.”

Ms Brodie-Smith added that ISA’s had been shown to be good investments in volatile markets, such as those experienced recently.

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