Savings rate rundown 19 February 2015

19th February 2015

Latest news:

Post Office has launched an Online ISA (Cash ISA) which allows customers to choose a fixed interest rate for 1 or 2 years, a variable rate or a mixture of both, using the current tax years’ allowance. So the £15k allowance can be split between fixed rates and a variable rate if you would like to. The Easy Access variable rate is 1.50% and is the top rate available for an easy access ISA that allows transfers in. The 1 year fixed interest rate is 1.55%, which is fairly competitive and the 2 Year fixed interest rate is 1.95%, equal to the top 2 year fixed rate ISA on the market at the moment.

It is great to see a provider offering the flexibility of being able to choose between fixed and variable rate ISAs. This allows savers to build balanced savings portfolios, getting a fixed return, as well as being able to take advantage if interest rates increase in the future. It is important to not to have to compromise on the interest rate in gaining flexibility and the good news is that the interest rates are competitive, so you will not have to make that compromise too much. 

United Bank UK has recently increased the rates on various fixed rate bonds for new accounts opened. The 1 year Fixed Deposit is paying 1.75% (previously 1.50%), the 2 year Fixed Deposit is paying 2.15% (previously 2.06%), the 3 year Fixed Deposit is paying 2.45% (previously 2.36%) and the 5 year Fixed Deposit is paying 3.02% (previously 3.01%).

With many providers continuing to lower the fixed rates they have on offer, these increases are a welcome sight. The 1, 2 and 3 year rates are competitive among widely available bonds, sitting next in line after Punjab National Bank (2%, 2.30% and 2.55% respectively) and offer the top rates for those looking for monthly income for 2 and 3 year terms. Whilst the 5 year sits just below the market leading rate from Secure Trust Bank (3.03%), that account does not allow compounded interest, so the United Bank UK bond offers a higher overall return over the term. 

United Bank UK then followed these changes by increasing the rate on its 1 Year Fixed Rate ISA from 1.40% to 1.65% for new accounts opened.  This increase brings the ISA in line with the top paying 1 year fixed rate ISAs on the market at the moment from Virgin Money and Julian Hodge Bank. Interestingly, Virgin this week reduced its market leading 1 year fixed rate ISA of 1.70% to 1.65% for new accounts opened. With a lower minimum balance and the ability to make withdrawals subject to a penalty, the ISA from Virgin looks to be the more flexible option.

United Trust Bank (not to be confused with United Bank UK mentioned above) has also recently increased selected fixed rate accounts for new accounts opened. The most interesting change has been to the 5 Year Fixed Rate ISA which has been increased from 2.50% to 2.75%, now the top paying 5 year fixed rate ISA on the market. However, the account only allows transfers in, so new money cannot be deposited in the account. An ideal account for those looking to transfer in, but the account won’t appeal to everyone.

Al Rayan Bank (previously named the Islamic Bank of Britain) has increased the expected profit rate on its Sharia compliant Notice Cash ISA from 1.80% to 2%, for both new and existing customers.

After the recent increases from National Counties Building Society, it is great to see another provider going against the overwhelming trend of rate cuts affecting existing account holders. Although the rate is an expected profit rate and is not fully guaranteed, it is market leading.

Close Brothers increased the rate on its Select Gold 3 Year Fixed Term Deposit from 2.40% to 2.50% for new accounts opened. The new rate is competitive, sitting next in line after Punjab National Bank (2.55%), if you are not eligible for the 65+ Guaranteed Growth Bond from NS&I.

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