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Best Cash ISA as Providers Start Sowing Seeds for Fresh Season

Personal_Finance / ISA's Feb 12, 2019 - 03:59 PM GMT

By: MoneyFacts

Personal_Finance

Savers will be pleased to find out that providers have stepped up competition in the ISA market, with rates rising and new deals being launched to entice savers since the start of 2019.

Indeed, the latest research from Moneyfacts.co.uk can reveal that 24* savings providers have increased rates or launched new ISAs, with some securing a Best Buy position in the process.


Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“It’s encouraging that the ISA market is showing signs of life so early on in the year, with providers increasing rates and launching new deals, some of which now offer market-leading rates. In fact, 15 providers have upped rates and 10 providers have launched fresh deals since the start of 2019*.

“Savers may well be looking towards the short-term market for an ISA due to growing economic uncertainties. In the easy access ISA market, Shawbrook Bank, Tesco Bank and Yorkshire Building Society have upped their rates and feature in the top 10 best deals in the market, sitting just shy of the market leader Virgin Money.

“A stream of increases can also be seen in the fixed ISA market, with the one-year fixed sector seeing the most competition as Charter Savings Bank, Chelsea Building Society, Coventry Building Society, Cynergy Bank, Dudley Building Society and Yorkshire Building Society have all improved their rates and taken positions in the one-year fixed ISA Moneyfacts.co.uk Best Buys as a result.

“Despite this glowing positivity, it is worth noting that fixed rate bonds and easy access accounts outside of an ISA wrapper generally pay better returns, especially when considering the market leaders. The Personal Savings Allowance** that came into effect in April 2016 has had a negative impact on the appeal of ISAs, which is still felt today almost three years on. There are also more challenger banks outside of the ISA market too, as well as more activity generally in the fixed bond market.

“The best easy access rate outside of an ISA wrapper (based on a £10,000 investment) currently comes from ICICI Bank UK, paying 1.54% while the best one-year fixed bond comes from Al Rayan Bank, an Islamic bank, offering 2.15% gross as an expected profit rate. In real terms, many of the cash ISAs available on the market fail to outpace the impact of inflation. In fact, only three deals can beat 2.1%, the current level of inflation (CPI).

“Clearly, providers are sowing the seeds for savers to discover market-leading returns, and as the ISA season flourishes, it will hopefully lead to increased competition and even better deals as we move closer to the new tax year.”

*Providers that have increased ISA rates since the start of 2019: Aldermore, Charter Savings Bank, Chelsea Building Society, Coventry Building Society, Cynergy Bank, Dudley Building Society, Leeds Building Society, Leek United Building Society, M&S Bank, Sainsbury's Bank, Shawbrook Bank, Skipton Building Society, State Bank of India, Tesco Bank and Yorkshire Building Society. Providers that have launched new ISA’s since the start of 2019: Barclays Bank, Coventry Building Society, Loughborough Building Society, Marsden Building Society, Monmouthshire Building Society, Newcastle Building Society, Paragon Bank, Principality Building Society, Saffron Building Society and Teachers Building Society.

**Personal Savings Allowance: Basic rate taxpayers can earn up to £1,000 in savings income tax-free (or £500 for a higher-rate tax payer) since 6 April 2016.

moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, there is no commercial influence on the way moneyfacts.co.uk ranks products, showing consumers a true picture of the best products based on the criteria they select. The site also provides informative guides and covers the latest consumer finance news, as well as offering a weekly newsletter.

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