Get 4.5% on your savings tax-free

Getting a decent return on your savings is far from easy these days, so I welcome a cash ISA that pays you 4.5% a year for five years. And it's free of tax!

It's called the Governor Money Bank of Ireland Five-Year Fixed Rate ISA and no other ISA pays such a high rate. It's a very attractive product and is well worth signing up for - as long as you don't mind locking away your money for five years.

The ISA is provided by Bank of Ireland, but you can't actually get it at Bank of Ireland branches or on the bank's website. You have to apply via Governor Money, a new service that was launched this year.

Governor Money is a savings platform that enables you to manage several savings accounts in one place. You can do everything with one password and you'll also get one consolidated monthly statement.

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Strengths
Let's look at the other strengths of this service:

1. Helps you stay within compensation limits
If your bank goes bust, you can get your money back from the Financial Services Compensation Scheme (FSCS) - up to a limit of £85,000.

That sounds great but you can get caught out if you have more than one account with a bank. The £85,000 limit applies to all of those accounts added together.

What's more, there are some banks and brands that share the same banking licence. If you have accounts with banks that share a licence, you won't get more than £85,000 in total.

It's hard to keep track of all of this, but if you open your savings accounts with Governor, you'll be told if you've gone over the FSCS limit. That could be a very useful warning if banks start collapsing again.

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2. Your money should always earn a decent interest rate
Customer apathy is one the biggest money-makers for the banks. Let's say you sign up for a market-leading three-year bond. Your money earns a decent rate for that period, but the danger comes when the bond expires.

At that point, your bank will probably shift your cash into an ordinary savings account with a rubbish rate of interest and hope you don't notice. But that shouldn't happen if you opened your bond via Governor. You'll be told that your bond has expired and that it's time to find a new home for your savings.

3. Easy to manage your ISAs
Moving a cash ISA from one bank to another can be a real pain. You have to fill in forms and you can lose interest while the money is moved - that can take as much as 15 days.

But once you've transferred your ISA to Governor, you can switch between banks just by clicking some buttons online. Much less hassle.

You can also split your cash ISA allowance between several banks - something which is unique to Governor. So you could put some of your money with the best instant access ISA provider whilst another chunk of your cash could get a higher rate in a five-year bond ISA.

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Not enough choice
However, there is one big downside with Governor. There are only 13 savings products currently available. What's more, all the accounts are offered by building societies or smaller banks. The big boys are all absent.

This lack of choice is disappointing but it doesn't mean you shouldn't sign up for the Bank of Ireland deal. Signing up for Governor is pretty easy and then you can get 4.5% on your cash.

If Governor offers a poor range of savings products when the five-year term is up, you'll just have to move your money out from the Governor umbrella. That would be a pain but not the end of the world. It's worth enduring a bit of hassle if you can get a 4.5% interest rate.

As for Governor, it will be interesting to see if it can become a success story. The big question is whether the big banks can be persuaded to join up. If the big boys won't play, Governor can never be more than a niche player.

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