Leeds Building Society has launched another individual savings account (Isa) with a new online product
The limited issue online Isa pays 1.11 per cent tax-free a year/annual equivalent rate (AER) and offers penalty-free access. In addition to this year’s Isa subscription limit of £20,000, transfers coming in from previous years’ subscriptions are permitted.
The new Isa offering is easy access and comes with no restrictions on withdrawals.
On the day after maturity (1 February 2019) funds are transferred to an instant access Isa maturity account. It has a minimum balance of £1,000 and maximum of £250,000. This includes 2017/18 Isa funds, previous years’ Isa funds and accrued interest.
The launch comes as industry figures show almost £50bn of UK Isa savings are in accounts paying 0.25 per cent or less.
From 24 October, Leeds Building Society will increase the minimum rate paid across all member savings accounts to 0.5 per cent. The terms and condition for all accounts affected are unchanged. The accounts remain variable, are not linked to any other rate, and can go up or down at any time.
The society has also made changes to its fixed-rate Isas. It changed the rate on its one-year fixed rate Isa to 1.35 from 1.2 per cent tax-free pa/annual equivalent rate (AER). Its two-year fixed-rate Isa is now paying 1.4 per cent tax-free pa/AER.
Provider view
Richard Fearon, Leeds Building Society’s chief commercial officer, said: “This latest variable rate product complements our existing Isa range and it shows our commitment to offering good value products to members who want to keep their savings returns tax-free.
“There is still a place for Isas in savers’ financial planning – even after the introduction of the personal savings allowance. However, there are billions of pounds that are sitting inIsa accounts that pay no more than the bank base rate.”
Adviser view
Daren O’Brien, director at Aurora Financial Solutions, said: “We have many cautious investors who have been crying out for higher interest rates and better savings offerings.
“Hopefully, other providers will now follow the example of Leeds by also increasing their rates.”
Charges
N/A
Verdict
It is good that Leeds Building Society is increasing its rates to meet the growing demand of people who are looking for better returns from their savings.
Easy-access cash Isas mean clients can take out their money when they want without penalty.
However, there are other fixed-rated products that offer some access for those who are not necessarily in a rush to withdraw the money within the first year.
