The five-year Isa with 3.05 per cent interest is available for the 2013/2014 tax-year subscription of £5760 and will allow transfers in from previous subscriptions from other providers.
The five-year Isa that allows access to savings will pay 2.9 per cent, offers 25 per cent penalty-free access, and accepts transfers in from previous years’ Isa subscriptions from other providers.
Customers who have used their tax-free allowance in full each year since inception could have balances of more than £60,000 to transfer.
The tax free offers have a minimum investment of only £1.
Leeds’ five-year bond, with a headline rate of 3.05 per cent, is complemented by an additional five-year version available with 25 per cent access at 2.9 per cent.
Kim Rebecchi, sales and marketing director of Leeds Building Society, said: “We are pleased to increase the rate to further assist those savers looking for value, security and a return that is higher than the current rate of inflation. Additionally, regarding the Isas, while the traditional Isa season is in March and April each year around the tax-year end, our research showed that approximately £8.5bn of fixed-rate Isa balances mature in quarter four 2013, and also highlighted that a further £26.7bn of non-Isa bonds were maturing during the same period, which means that many savers will now be looking to maximise their returns. Our customers can benefit from a tax-free return on all of their Isa savings, which is higher than the current rate of inflation.
“We had a great response to the first issues of these products and are delighted to now increase the rate to further assist those savers looking for value and security. The rate on our market-leading five-year bond and Isa has increased from 3 per cent to 3.05 per cent, with the rate for customers who like the flexibility and peace of mind provided by penalty-free access to 25 per cent of their funds at any time increasing from 2.75 per cent to 2.90 per cent.”
No introductory charges, however a penalty applies after 25 per cent of the Isa is withdrawn.
Andrew Morgan, director of Cheshire-based NOW Financial Solutions, said: “I wouldn’t advise any of our clients to touch this with a barge pole as locking rates in now for savings is likely to involve a huge degree of opportunity cost. With the UK economy recovering, and interest rates currently near zero, UK rates are more likely than not to go higher in the next five years than the other way so why lock in at these rates for the fixed term?”
Although the Bank of England has made it fairly clear that the UK’s base rate will remain at a record low of 0.5 per cent until unemployment holds above the 7 per cent level, with the UK economy apparently perking up, locking in at a rate of 3 per cent would seem to preclude any further upside to the country’s economic revival.