Be tempted by Tessa - while you still can!

I HAVE a tenner and not much time to open a TESSA, but you don't need either much time or much dosh to open one of these attractive accounts.

I might even ask for change from my measly tenner.

TESSAs become history on April 6, but with financial products extinction does not necessarily mean stone cold dead. Although it will not be possible to open a TESSA after April 6, any TESSA which is opened on time will be allowed to run its course.

We tend to associate TESSAs with amounts running to thousands of pounds, but these sums refer to the maximum amounts per year or over the term of the account.

A handful of pennies is enough to start one, and once it is opened, it will run and run. You can top it up later.

On April 6 TESSAs (and PEPs) will be replaced by ISAs (Individual Savings Accounts) which also provide tax concessions.

However, ISAs are not as generous as TESSAs, which is why those who qualify for opening a TESSA probably should do so. TESSA stands for Tax-Exempt Special Savings Account. It is truly tax exempt and, consequently, genuinely special, especially for those who won't need to touch the capital for five years.

You are allowed one TESSA at a time, which means that if you had a TESSA that matured or will do so before April 6, you can roll over the capital into another TESSA. You can plop the full pounds 9,000 into your follow-on TESSA. What you do with the interest you have earned is your own affair.

Maximum investment in your first TESSA is pounds 9,000 over five years, with a maximum of pounds 3,000 in the first year, and pounds 1,800 in the following years

(ISA maximums are pounds 7,000). If you save the maximum per year for the first four years, your total will be pounds 8,400, so the final year maximum will be pounds 600. The interest is tax free.

TESSAs work best if you invest the maximum amount allowable over the full term. You can withdraw the interest without penalty, but premature withdrawal of capital incurs a penalty.

The penalty is not particularly harsh, and it will be in the interest of many savers to open a TESSA with the best of intentions, even if they have to withdraw capital before it matures or decide against topping it up.

Even if the penalty is activated, you still earn interest, and the net result is fairly equal to what would have happened with an ordinary savings account. You might even come out a little ahead. However, you do lose the tax concessions.

In the past, TESSAs have tended to pay higher rates of interest compared with ordinary savings accounts, and the tax concessions have been icing on this rich cake.

Generally, variable-rate TESSAs were more attractive than fixed rate TESSAs. In the ISA era, TESSA rates generally are expected to fall, and fixed rate varieties may offer better value than variable.

Before I open my TESSA, I'll compare track records of the leading contenders, and I'll read the small print. For example, changing providers midstream is often a temptation for the saver, whereas the provider would prefer you to stay put.

They have methods of persuasion, especially in the form of penalties, so make sure you know how much interest you will have to forfeit and what exit fees you might incur if you switch. Fixed rate accounts in particular can be onerous.

After I open my TESSA, I will start monitoring interest rates, and I'll see how ISAs settle down. I will be entitled, but not forced, to save as much as pounds 9,000. I can choose to add nothing at all to my initial payment, and even close the account entirely.