Rates Rundown - Cash ISA special

28th March 2017

New best buys hit the market as we approach the ISA deadline!

Time is ticking away for savers to take advantage of their 2016/17 cash ISA allowance, with the 5th April deadline fast approaching. The last few weeks has seen a number of providers improving the rates they have on offer and launching new best buys to try and scoop up those yet to act.

The only word of caution is, that as the deadline approaches, providers will start to pull accounts from the market to ensure that all applications are completed and funded in time. In fact, last week we saw Aldermore withdraw its cash ISA range from sale until the new tax year.

Most of the action in the last few weeks has taken place amongst fixed rate cash ISAs, with a selection of new market-leading rates and best buys covering the full range of terms, from 1 year to 5 years. However, in the last few days, we have seen a new market-leading easy access cash ISA launched by Coventry Building Society.

Amongst shorter term fixed rate cash ISAs, Bank of Cyprus UK improved the rate on its 1 year ISA and is now the market leader. In the two year best buy table, Principality Building Society leads the way after improving its rate.

It’s a similar story in the 3 year best buy table, with market-leading rates from Paragon Bank and Coventry Building Society. An improved rate from Paragon Bank and a new account from Coventry Building Society sees these providers joint top of our best buy table.

Finally, the 5 year best buy tables saw a new entrant come in straight at the top, United Trust Bank. Unusually, this account only accepts transfers in from previous ISAs, so for those investing this years’ allowance, Paragon Bank is the top rate, with the newly launched ISA from Coventry Building Society next in line.

Coventry Building Society increased the rate on its Easy Access ISA (5) from 0.90% to 1.05% tax free/AER, benefiting both new and existing account holders. Accounts can be opened online, by post, by telephone or in branch, with a minimum of £1. Transfers in from existing ISAs are allowed into the account.

So, great news for those looking for easy access to their ISA money, but also it is unusual to see a provider actually increase the interest rate for existing account holders, where many providers continue to do the opposite and cut rates.

Bank of Cyprus UK improved the rate on offer on its 1 year fixed rate cash ISA from 1.05% to 1.10% tax free/AER and is now top of our best buy table. The account can be opened online, with a minimum of £500 and transfers in of previous ISAs are allowed into the account.

So, an improved rate on offer, despite the provider already being joint top of the table. By pulling ahead of the competition, this provider should be commended, actively pushing interest rates back in the right direction.

Principality Building Society increased the rate on offer on its 2 year fixed rate cash ISA from 1.10% to a market-leading 1.26% tax free/AER. Accounts can be opened in branch, online or by post, with a minimum of £500 and transfers in of previous ISAs are permitted.

Again, a provider pushing up interest rates and encouraging savers in with an improved interest rate.

So far this month, Paragon Bank has improved the rates on its 2 year, 3 year and 5 year fixed rate cash ISAs, with all accounts featuring in our best buy tables. The 2 year fixed rate cash ISA pays 1.20% tax free/AER, the 3 year pays 1.40% tax free/AER and the 5 year fixed rate cash ISA is 1.75% tax free/AER. Accounts can be opened online, with a minimum of £500 and transfers in from previous ISAs are allowed.

The pick of the bunch is the 3 year fixed rate cash ISA, which is now the joint market-leader, although the 5 year ISA is the top rate for those who are looking to deposit this year’s allowance. The 2 year rate is a best buy, second only to Principality Building Society’s market-leading rate.

United Trust Bank launched a new 5 year fixed rate cash ISA paying 1.85% tax free/AER. Accounts can be opened by post with a minimum of £5,000, but only transfers in from existing ISAs are accepted into the account. You are not able to open the account with non-ISA funds.

Currently the top rate on the market for a fixed rate ISA and the best offering for those looking to transfer in previous ISAs, however those looking to deposit new funds before the end of the tax year will need to look at the next best rate, from Paragon Bank.

Finally, last week, Coventry Building Society launched two new fixed rate cash ISAs, both of which entered our best buy tables. The Fixed Rate ISA (39) pays 1.40% tax free/AER, fixed until 31/05/2020, so just over 3 years. The Fixed Rate ISA (40) pays 1.70% tax free/AER, fixed until 31/05/2022, just over 5 years. Accounts can be opened online, by telephone, by post or in branch, with a minimum of £1. Transfers in from previous ISAs are allowed into the account.

A rare appearance in the best buy tables, but a welcome one with two competitive rates. A range of options for opening the accounts and a low minimum requirement mean that these are fairly flexible options to consider.

As we get nearer to the end of the tax year, expect to see some providers withdrawing accounts from the market or setting deadlines for applications to be submitted. We may well see a few more providers pushing rates up to attract the last of this tax year’s deposits. Either way, watch this space and we will keep you up to date with the latest news.

If you would like to discuss further options or would like any help with your savings, please get in touch. Our Bath-based savings experts would love to hear from you, so call us on 0800 321 3581. 

 

  

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