Skipton Building Society has increased the rate of interest on its one-year fixed rate Isas and bonds to 1.4 per cent.
The provider has launched an easy access Bonus Cash Isa Issue 5, which pays 1 per cent, plus a 0.4 per cent bonus for 12 months.
The product will become a Flexible Isa from 6 April, so means savers will have the flexibility to be able to take money out of their Isas and put it back in without it counting towards their annual Isa allowance.
Two and three-year fixed term Isas and bonds remain at 1.5 per cent and 1.6 per cent respectively.
Customers can deposit the annual Isa limit of £15,240 into Skipton’s fixed rate Isas and are also able to transfer in previous year’s Isa allowances.
Provider view
Kris Brewster, head of products at Skipton Building Society, said: “We are pleased to offer our popular easy access Bonus Cash Isa, plus increased rates for those looking to invest over a fixed one-year term. Our bonds and E-Bonds allow customers to save up to £1,000,000, and our fixed rate Isas continue to offer savers attractive rates despite the low rate environment.”
Adviser view
Alan Solomons, director of London-based Alpha Investments & Financial Planning, said: “I do not know the last time I recommended a cash Isa, but I have done so in the past. If a client has money sitting in their current account, I would tell them to consider opening a cash Isa. The savings are tax-free and the client will be free to withdraw and deposit cash as they see fit. We push people into more exciting Isas if they are looking to save over the long-term.
I would agree that sometimes, current accounts offer more competitive interest rates. The Santander 1 2 3 Current Account offers good rates up to £20,000. Who would trade in the top 3 per cent rate of interest for a one-year fixed cash Isa offering 1.4 per cent a year?”
“At the moment, bonds are over-priced. The sustained period of negative interest rates indicates that something has gone wrong in the financial system.”
Mr Solomons added: “Skipton is a high street building society, and are obviously targeting Joe public with this product, not intermediaries.”
Charges
N/A
Verdict
Cash Isas have not been particularly exciting for a while now. Isa season used to be a time in which lenders upped the rates to their cash Isa offerings in attempt to stave off competition and attract new custom. In the years following the financial crash, the occasion has turned into a somewhat drab affair, with very few providers offering products that trump the rates offered by currents accounts. In addition, the mushrooming of the ‘you only live once’ sentiment threatens to destroy the savings culture at the detriment to banks and building societies.
Cash Isas still have an important role to play for individuals with a low or no attitude to risk seeking to save over a short period of time. The return from cash Isa deposits is never going to be groundbreaking but it is a return nonetheless. Also, for many the ‘piece of mind’ factor in that their deposit is not subject to investment risk is a huge plus point.
