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I SAVED pounds 200 BUYING MY ISA; Don't pay those upfront charges.

Byline: PIPPA CRERAR

SAVERS have wasted more than pounds 500million in charges since ISAs were launched two years ago.

They have poured more than pounds 17billion into equity ISAs - and been charged up to 5 per cent upfront for the pleasure. But if they'd gone to a discount broker they could have got part or even all of it back.

Salesmen get a commission from providers on the ISAs they sell. But some are prepared to split the commission with you to boost sales - just like a car dealer offering you a new motor below list price.

Cheryl Downing, 47, from Hove, East Sussex, has just invested pounds 5,000 in a maxi ISA through HCF discount brokers and saved pounds 200 in charges.

"I'd been investing for my daughters," she says. "I decided to put the money into something until they get married, as they'll need it then."

Last tax year, Cheryl paid commission when she put her cash in an Alliance and Leicester ISA.

"My money had been sitting in a low-interest savings account there for years and they suggested I move it to an ISA," she says.

"I hadn't realised they were taking a percentage commission, but when you think about it, that's how they earn their money."

If you buy an equity ISA through a traditional broker, bank or building society - or even straight from the investment house - you will normally be charged between 3 and 5 per cent. This covers advertising, sales costs and profits.

Most discount brokers offer a no-frills service and don't provide any advice, which means they can cut down on costs.

Those which do offer advice make their money from the volume of their business.

The commission you get back depends on the fund your money is invested in. You can often get the full whack back.

It is usually given in the form of extra units on your ISA, though some brokers offer cash back. You can avoid charges by shopping online at a website such as virginmoney.com or going for Cat-marked funds which can't charge more than 1 per cent upfront.

Four out of five people don't realise they could save up to pounds 350 on the cost of taking out a maxi ISA.

Instead they have paid out more than pounds 6billion on charges for ISAs, Peps and unit trusts over the past decade, says virginmoney.com.
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Title Annotation:Features
Publication:The Mirror (London, England)
Date:Feb 21, 2001
Words:400
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