9th April 2015
Anna Bowes co-founder of Savings Champion and Mindful Money columnist looks at the best and newest savings deals hitting the market…
Leeds Building Society has launched new versions of its fixed rate ISAs, paying higher interest rates than the previous versions. The 1 Year Fixed Rate ISA (Issue 70) is 1.60% (the previous version was 1.50%), the 2 Year Fixed Rate ISA (Issue 65) is paying 2.10% on balances of £15,000 and over and 1.70% on balances below £15,000 (the previous version paid 1.80% on all balances).
The 3 Year Fixed Rate ISA (Issue 39) is paying 2.20%, whereas the previous version was paying 2% and only accepted 2014/15 tax year funds. The 5 Year Fixed Rate ISA (Issue 44) paying 2.30% has been withdrawn and has not been replaced with a new version.
It is encouraging to see at least some providers launching improved rates as we kick start the new tax year, to hopefully entice savers looking to invest the new cash ISA allowance. The 1 year fixed rate ISA sits just behind the market leading rate of 1.65% from Virgin Money, Julian Hodge Bank and Aldermore.
There is even better news for those looking for a longer term, as both the 2 year and 3 year rates are market leading, although you need to invest the full allowance to get the top rate of the 2 year ISA. These fixed rate ISAs are also fairly flexible, allowing penalty free access to 25% of the balance, a feature that is unusual amongst this type of cash ISA.
Aldermore has launched a range of new Fixed Rate Cash ISAs. The 1 Year Fixed Rate Cash ISA is paying 1.65%, the 2 Year Fixed Rate Cash ISA is paying 1.85% and the 3 Year Fixed Rate Cash ISA is paying 2%.
Whilst the 2 and 3 year fixed rate ISAs are not market leading, they are both in the top 5 of the respective terms. Much better news is the 1 year fixed rate ISA, which is equal to the market leading rates from Virgin Money and Julian Hodge Bank. It is good to see this provider back in the ISA market after a short absence with best buy rates.
Al Rayan Bank has launched a new 12 Month Fixed Term Deposit Cash ISA paying a 1.90% expected profit rate. The account is Sharia compliant so does not pay interest, but an expected profit rate, but the profit is tax free, like a standard cash ISA.
This cash ISA pays a rate that is heads and shoulders above the current market leading non Sharia compliant 1 year fixed rate ISAs, although because the account is Sharia compliant, it pays an expected profit rate, rather than standard interest. Whilst the provider would state that this profit is generally paid, it is not absolutely guaranteed. However, as long as savers are aware of this important distinction and are comfortable with the slightly higher risk, the return is far in excess of the next best of the competition.
Nationwide has launched a Regular Saver ISA paying 2.07% tax free/2% AER. On 1 April 2016, the account will be transferred to the on sale version of the Instant ISA Saver (currently 1.25%) or the nearest equivalent easy access ISA. Monthly payments of up to £1,270 can be made and you can make withdrawals at any time, without restriction.
Nationwide has done very little so far in this ISA season, but as they did last year, this account is an interesting addition to the easy access ISA market. Whilst it will not appeal to everyone, as you are restricted to how much you can put in each month, it could be ideal for those looking to invest smaller amounts. Unusually for a regular savings account, there are no withdrawal restrictions, so it can be used like any other easy access ISA, the best of which at the moment pays 1.50%. Savers need to be aware that after 1st April 2016, the rate will drop as the account is moved to a standard easy access ISA, currently paying 1.25%, so they may need to look at an alternative.
Charter Savings Bank has made a number of positive changes to its savings range. The 95 Day Notice – Issue 1 paying 1.75%, has been withdrawn. A new 120 Day Notice – Issue 1 has been launched paying 1.85%, replacing the 95 day notice product at the top of the Notice Accounts Best Buy Tables.
The 1 Year Fixed Rate Bond paying 1.80% has been withdrawn and replaced with a higher paying version paying 2%. The 2 year fixed rate bond now pays 2.20% (the previous version was 2.15%) and the 3 year fixed rate bond pays 2.25% (the previous version was 2.20%).
So, Charter Savings Bank is continuing to make waves in the savings market with yet more improvements to its product range. Whilst the notice period is longer than the previously available account, the new 120 day notice account pays a significantly better rate than its nearest competition (Shawbrook Bank 1.75%). Hopefully, this will spur others into life and push the rates up even higher. The new fixed rate bond rates are an improvement and the 1 and 2 year rates are both in the top 5 for the terms, although the 3 year is still some way off the best buys.