Skipton Building Society has announced an increase in the rates it pays on a range of fixed-rate Isas and bonds. Skipton also announced interest rate rises on all one-year terms.
The online one-year fixed-rate bond will pay 1.60 per cent and the one-year fixed-rate Isa will offer savers 1.50 per cent.
Rates on Skipton’s three-year fixed-rate Isas have increased to 2.20 per cent.
Skipton’s fixed-rate Isas have an annual limit of £15,000 and can be opened online or in branch.
The account required a minimum opening balance of £500 by cash in branch, or via debit card, cheque, internal transfer from another Skipton Building Society non-Isa account or Isa transfer from another provider if online.
Full balance withdrawals, including transfers to other Isa managers, and subsequent closure of the account, can be made subject to the loss of 180 days’ interest, or 240 days’ interest for the five-year term.
The loss of interest will be taken from the capital invested if there is insufficient accrued interest on the account. This means investors may get back less than they paid in.
Partial withdrawals and transfers out are not permitted: monthly versions of the Frisas are also available.
Kris Brewster, head of products at Skipton, said: “The new Isa rules mean that people can put substantially more of their savings into a tax-free wrapper, up to £15,000. Since the announcement of the New Isa we have seen a record number of Isa customers attracted to the Skipton, and we are continuing to offer savers attractive rates, including increased interest rates on all one-year products.”
Provider view:
Kris Brewster, head of products at Skipton said: The fixed rate Isas and bonds continue to reflect the society’s commitment to offering consistent, long-term good-value products with exceptional customer service. And the combination of simplicity and attractive fixed rates means customers can invest their money with confidence.
Adviser view:
Ben Willis, an adviser at Whitechurch Securities in Bristol, said: “With the consumer price index falling from 1.6 per cent to 1.5 per cent, the Skipton Isa and bond offers an inflation matcher; but you still have to lock your money away for a year to achieve it. Even the bonus cash Isa will likely only offer 1.5 per cent if you keep it in place for 12 months.
“With the prospect of interest rate increases within the next 12 months, this does not seem enticing enough, particularly when you consider that the retail price index is running at 2.4 per cent. However, holding part of your overall investment pot in cash still provides security, a timely reminder considering what is happening in investment markets at present. But I would be reticent about locking monies away for 12 months unless you needed the certainty of the return.”
Verdict:
Cash has not been king for savers for some time now. Skipton’s new rates do offer hope to those who want to have a core cash holding in a decent-paying Isa. However, there are other cash-based investments paying slightly more. Some current accounts are offering better rates on savings. So while Skipton’s announcement may seem headline-grabbing, clients are still going to have to seriously shop around to make sure their cash is beating inflation, or lock their money away for some time to make best use of the lower rates available.
