Close Brothers Savings has launched a new two-year fixed Cash ISA with a 4.55 percent interest rate, earning an “excellent” Moneyfactscompare rating.
The account is aimed at savers with larger sums to invest as it requires a minimum deposit of £10,000 to open.
However, savers can expect to see sizeable returns. To give an example of the interest the pot can amass at its current rate, a £10,000 deposit is estimated to earn £455 over a year.
Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Close Brothers Savings has launched a handful of fixed rate cash ISAs this week, including a Two Year Fixed Rate Cash ISA, which pays 4.55 percent.
“When compared against other ISAs with similar terms, the deal grabs a competitive position and may well attract savers who are prepared to lock away their cash for an agreed term in exchange for a guaranteed return over the next 24 months.
“Savers will need £10,000 to invest but they can also make transfers in from Cash ISAs or Stocks and Shares ISAs.”
However, Ms Eastell noted: “Savers should be cautious as even though early access is permitted, this will result in account closure and is subject to a 150-day loss of interest penalty. Overall, the deal earns an Excellent Moneyfacts product rating.”
Cash ISAs are a popular savings option for Britons as they enable savers’ money to grow without paying tax on the interest above the Personal Savings Allowance (PSA), which is £20,000 for the 2024/25 tax year.
Cash ISAs with a fixed rate of interest help add some certainty, as account holders can lock in the rate offered at the time of opening.
While Close Brothers Savings may be offering a “competitive” deal in the two-year fix sector, it isn’t quite topping the table.
Nottingham Building Society takes the top spot with an Annual Equivalent Rate (AER) of 4.73 percent. The account can be opened with £500 and interest is paid yearly. Earlier access is only permitted on transfers out and will be subject to 180 days’ loss of interest.
UBL UK falls just behind with an AER of 4.71 percent. Savers need a minimum deposit of £2,000 to launch the account and interest is paid on maturity. Earlier access is only allowed on account closure and will be subject to a 180-day loss of interest.
Ms Eastell said: “It is crucial savers keep on top of the changing market and make the switch to ensure they are not getting a raw deal, especially as we have seen some of the top rate deals drop below five percent. It would not be too surprising to see more providers adjusting their rates in reaction.
“One area of the market to see improvements has been the returns offered on ISAs, longer-term rates have thrived with new market-leading rates across the board.
“Savers who are open to locking away their cash for a five-year term can now receive the same return on their ISA as its five-year bond counterpart.”
She added: “Predictions suggest that inflation may begin to slowly tick up again in the coming months as high energy and food prices fall out of the index and as service inflation continues to be a core issue. During this time, it is crucial that savers do not grow complacent with their pots and switch accounts when attractive deals appear to ensure that inflation does not erode their cash.”
