Chorley Building Society has launched a new cash ISA paying a “top rate” of 4.8 percent for one year.
ISAs are becoming increasingly popular amongst Britons as an effective tax wrapper while personal savings allowances remain frozen and interest rates rise.
With an ISA, people can save up to £20,000 a year tax-free, and the interest rates on these accounts are becoming more competitive month by month.
Commenting on Chorley Building Society’s new deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Chorley Building Society has launched two new products this week, including its new Easy Access Cash ISA (one withdrawal) which takes a prominent position in the market, claiming a spot in our top rate tables for variable Cash ISAs.
“The deal pays a rate of 4.8 percent yearly and may appeal to savers who want instant access to their money and to use their ISA allowance.
“However, investors must consider that if they make more than one withdrawal in a year the rate drops significantly to 2.5 percent. Overall, this deal earns an Excellent Moneyfacts product rating.”
The account can be opened online, by post and in a branch with a minimum deposit of £1 by savers aged 16 or over. Interest is calculated daily and paid into the account annually on April 5. Savers are permitted one withdrawal every year without incurring a penalty.
If more than one withdrawal is made, the interest rate offered on the account will drop down to 2.5 percent for the rest of the year.
But while Chorley BS may be offering a more attractive rate, it isn’t currently taking the top spot of easy access ISAs. Coventry Building Society’s Online Four Access ISA pays an Annual Equivalent Rate (AER) of 4.9 percent.
This account can be opened online with a minimum deposit of £1 by savers aged 16 or over. Interest is calculated daily and can be paid either monthly or annually.
Four withdrawals are permitted every year without incurring a charge. After the fifth, a charge equal to 50 days’ interest will be applied based on the amount being withdrawn.
For those in need of more flexible withdrawal terms, Shawbrook Bank’s Easy Access Cash ISA (Issue 25) is offering an AER of 4.81 percent.
The account can be opened online with a minimum deposit of £1,000 by savers aged 18 and over. Interest is calculated daily and can be paid either monthly or annually. Unlimited withdrawals are permitted without charge, however, the minimum amount allowed is £500.
Commenting on the market, Adam Thrower, head of savings at Shawbrook said following multiple consecutive interest rate hikes by the Bank of England, “the peak might have finally been reached”.
However, he noted: “Savings rates remain high and still present a window of opportunity for those yet to move their money. But it’s not just about the interest rate anymore.
“With rates now much higher, holding £16,250 in a one-year fixed account could put you over the tax-free limit. Many savers are realising this and switching to Cash ISAs for tax-efficient savings – we have seen a 73 percent increase in new Cash ISA accounts from January to May 2023 compared to the same period last year.”
Mr Thrower added: “Our research found that half of savers (46 percent) in Britain are wasting money by choosing to leave their savings in current accounts with low interest. Check if you do have savings in your current account and if you are not being paid enough interest open a dedicated savings account which will pay you more.”
