Interest rates on savings accounts have been increasing month-on-month, mainly reflecting successive Bank of England Base Rate hikes, which started early last year to stem the UK’s spiralling inflation rate.
Fixed cash ISAs have been offering savers particularly higher returns, with many boasting rates of 4.5 percent or more.
Amongst the current top competitors is NatWest with its Two Year Fixed Rate ISA (Issue 323) with an Annual Equivalent Rate (AER) of 4.5 percent, and savers can get started with £1,000.
Cash ISAs come with additional perks to normal savings accounts, such as enabling savers’ money to grow without having to pay tax on the interest above the Personal Savings Allowance (PSA).
Cash ISAs that offer a fixed rate of interest also help add a layer of certainty to savings. It means the bank or building society cannot change the interest rate during the term, which works well for account holders hoping to save long-term.
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However, they can come with a few more restrictions, like penalty charges for early access or transfers.
NatWest’s Two Year Fixed Rate ISA (Issue 323) can be opened by UK residents aged 16 and over online, in a branch, or by phone, and only one account can be held in a sole name.
Interest is calculated daily and paid annually to the ISA on the first business day in April and on the maturity payment date.
However, if a saver wants to withdraw any funds before maturity, they’ll have to close the account and an Early Closure Charge will be applied. This will either amount to the “lower of the amount of interest earned” on the account or a charge equivalent to 90 days’ interest.
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The deal is only available until 5pm on June 14, 2023, to new customers and June 19, 2023, to existing customers.
But while NatWest is offering savers more competitive returns, the deal is currently topping the table. According to Moneyfactscompare.co.uk, UBL UK’s Two Year Fixed Rate Cash ISA takes the top spot with an AER of 4.65 percent.
The account can be opened by UK residents aged 18 or over with a minimum deposit of £2,000.
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Interest is applied on the maturity of the account term, however, early access is not permitted and will be subject to a 180-day loss of interest.
Close Brothers Savings is also offering a 4.65 percent AER on its Two Year Fixed Rate Cash ISA.
The account can be opened by UK residents aged 18 or over with a minimum deposit of £10,000.
Interest is applied yearly but similar to UBL, early access will result in a charge equivalent to 150 days of interest.
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