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Shawbrook bank has increased the interest rate on its one-year fixed Cash ISA to 4.8 percent, earning an “excellent” Moneyfactscompare rating.
The account can be launched with a minimum deposit of £1,000 and interest can be paid monthly or annually.
Fixed-rate ISAs are becoming increasingly popular amid frozen tax allowances and falling savings interest rates.
Fixed accounts provide some certainty to saving, as these enable people to lock in a specific interest rate for a set period of time. Meanwhile, Individual Savings Accounts (ISAs) allow people to save up to £20,000 a year tax-free.
Commenting on Shawbrook’s new deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Shawbrook Bank has increased the rate on its one-year fixed rate cash ISA.
“The account offers an attractive 4.8 percent on maturity and maintains a prominent position in the market.
“Alternatively, savers looking to boost their monthly income can instead opt-in to receive a monthly interest payment at 4.7 percent gross / 4.8 percent AER.”
Ms Eastell noted: “It is possible for consumers to access their cash early, however, this is subject to a 90-day loss of interest, so they may wish to consider carefully.
“On a positive note, further additions are permitted for the duration of the account. Overall, the deal earns an Excellent Moneyfacts product rating.”
While Shawbrook Bank may be offering an “attractive deal” in the one-year fixed rate ISA sector, it isn’t quite topping the table.
Virgin Money’s One-year Fixed Rate Cash ISA Exclusive (Issue 13) places top with an Annual Equivalent Rate (AER) of 5.05 percent.
There is no minimum deposit required to get started, interest is applied on maturity, and early access is subject to 60 days’ loss of interest.
Commenting on the market, Laith Khalaf, head of investment analysis at AJ Bell, said: “April was a blistering month for Cash ISA sales as higher interest rates pulled in hordes of punters.
“The £11.7billion inflow was the highest since ISAs were introduced in 1999, according to Bank of England data. The record inflow into Cash ISAs suggests the cost-of-living crisis might be ebbing away, as consumers find themselves with a few extra pennies to tuck away for a rainy day.
“Savers have also probably shifted their focus away from standard savings accounts to Cash ISAs because higher interest rates have made them vulnerable to paying income tax on their returns.”
While savers continue to plough money into cash, Mr Khalaf noted: “There are plenty of accounts out there offering pretty stingy rates.
“Money in the average instant access account is earning just 2.1 percent, and £251billion remains sitting in accounts paying precisely zero interest.
“There is still therefore a great deal savers can do to improve their returns simply by shopping around for better deals.”
