Banks have unleashed a new Isa interest rate war – here’s how you can benefit: SYLVIA MORRIS

Economy
By Liam

By Sylvia Morris

Updated:

Fierce competition has flared up again between banks, building societies and investment platforms offering cash Isas, with several launching new offers in recent days to tempt savers.

Savings rates have been falling for weeks, so it was a pleasant surprise to see a new batch of eye-catching deals appear this past week.

They don’t all show up in my Best Buy tables because they come with strings attached, meaning they’re not the best choice for all savers.

New deals: Savings rates have been falling for weeks, so it was a pleasant surprise to see a new batch of eye-catching deals popping up this past week

But if you’re aware of – and willing to abide by – their terms and conditions, they can provide a good opportunity to grow your money.

One of the most attractive new deals launched is Coventry Building Society’s new Four Access Isa (Online) 2, which pays 4.8 per cent.

It doesn’t show up in my Best Buy table because it’s not a really easy-to-access account. You can make up to four free withdrawals per year, rather than dipping in and out as needed.

But you can enjoy a very competitive rate. If you’re happy with going through an app, Trading 212 pays an even higher 5.1 per cent on an easy-to-access Isa.

Skipton BS’s new Base Rate Tracker pays 4.65 percent.

If you choose this account, the rate is not fixed, but you always know where you stand.

This is because it follows the Bank of England’s base rate by always paying only 0.35 percentage points below it.

However, there is one catch: it only follows the base rate for one year. Your money will then be transferred to another easily accessible Isa.

The association only pays 3.55 per cent on its Cash Isa Saver, so make sure you set a one-year reminder if you do close an account.

Fixed rate bonds stable after fall

A range of new, easy-to-access accounts have been launched – worth checking out if you’ve used up your Isa allowance or aren’t at risk of a tax bill.

One of the best is Skipton BS Base Rate Tracker number 6, an easy-to-access account that pays 4.65 percent.

It pays the equivalent of the Bank of England base rate minus 0.35 percentage points for one year.

Interest rates are likely to fall over the course of the year as the base rate is expected to fall. After a year, your money will be transferred to another easily accessible account, so make a note of what that is when it happens – and move your money if the rate is bad.

Coventry BS has a new Triple Access Saver (online) that pays out almost 4.83 percent. You are limited to four withdrawals per year or you will be charged the equivalent of 50 days’ interest. This is only available online.

The best fixed rate Isas are just above 4.5 per cent for a year, or at 4.4 per cent for two years.

These fixed interest rates may be lower than those offered before the Bank of England’s change in the base rate from 5.25 percent to 5 percent in August, but could prove good value if the base rate falls further.

The highest one-year interest rate is 4.56 percent compared to Aldermore, which launched today.

Some 2.1 million savers are expected to pay tax on their interest this tax year, according to a Freedom of Information request from HM Revenue & Customs from investment platform AJ Bell.

You can put up to £20,000 into Isas tax-free each tax year – and in the case of cash Isas, you can spread it across fixed rates and easy access across different providers.

Sy.morris@dailymail.co.uk

See the best cash Isa rates in our savings tables

Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow a commercial relationship to compromise our editorial independence.

You might also like More from author