The Bank of England has been increasing its Base Rate in a bid to temper the UK’s rapidly rising inflation rate, which has only meant good news for savers. Banks and building societies have been reflecting the increases, and Nationwide is next to hop on the trend. The building society raised the interest rate on its one-year fixed term ISA, offering account holders higher returns.
Fixed term ISAs are a type of savings account that offers a fixed rate of interest for a set length of time. This means the bank or building society cannot change the interest rate during the specified term length, which works well for account holders hoping to save long-term.
ISAs are often a popular route people take to save, as these accounts allow up to £20,000 to be deposited per year, without having to pay tax on the interest above the Personal Savings Allowance (PSA).
While there is currently no account on the market that beats the UK’s soaring 11.1 percent inflation rate, fixed term ISAs typically pay savers the “best interest rates” according to Moneyfacts.
The Nationwide Building Society 1 Year Triple Access Online ISA 14 is now paying 2.5 percent gross on the anniversary of the account opening if no more than three withdrawals are made within the year.
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“The 1 Year Triple Access Online ISA has improved its position in its sector and now pays 2.50 percent. Savers who are keen to take advantage of this deal would be wise to keep in mind that a lower rate of 0.75 percent will be paid for the remainder of the term if more than three withdrawals are taken in any year.”
However, Ms Springall continued: “There are alternatives out there for savers who want more flexibility, such as Principality Building Society who pay 2.50 percent on its Online ISA, which does not limit withdrawals.”
And for those who aren’t too fussed about withdrawals but are hoping to garner higher rates of interest, there are one-year fixed term ISA accounts on the market currently offering rates as high as 4.25 percent, such as Cumberland BS’s 1 Year Fixed Cash ISA.
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Withdrawals are permitted as long as the balance does not fall lower than £5,000. In this instance, a charge of 90 days’ loss of interest will be applied to the amount withdrawn.
Tesco Bank’s Fixed Rate Cash ISA can be opened with a minimum deposit of just £1 and interest is earned at a daily rate and applied to the balance on the anniversary of the account opening.
However, withdrawals are not permitted during the fixed term. If the account holder needs access, the account must be closed or transferred to another provider. This will incur a charge of 90 days’ interest, which will be deducted from the account balance.