United Trust Bank has increased the interest rate on its Cash ISA to 4.42 percent, earning an “excellent” Moneyfactscompare rating.
The interest rate, which is fixed for two years, is paid annually and on maturity and savers can get started with a minimum deposit of £5,000.
Based on a deposit of this size, the estimated returns in line with this interest rate would be £451.77.
Cash ISAs are a popular savings option, as these accounts enable people’s money to grow without having to pay tax on the interest above the Personal Savings Allowance (PSA).
ISAs with fixed interest offer greater certainty to savers, as people can lock in the rate offered at the time of opening.
Commenting on the deal, Caitlyn Eastell, spokesperson at Moneyfactscompare.co.uk, said: “United Trust Bank has increased the rate on its Cash ISA Two Year Bond, now placing competitively against Cash ISAs with similar terms.
“Savers must have a minimum investment of £5,000. Earlier access is permitted, but will be subject to 270 days’ loss of interest.”
However, she noted: “Further additions are not permitted, so investors will need to be happy with their initial deposit. Overall, this deal earns an Excellent Moneyfacts product rating.”
While United Trust Bank may be offering a more appealing rate, it isn’t quite topping the table for two-year Cash ISAs. The United Bank of India offers an Annual Equivalent Rate (AER) of 4.5 percent. Savers need a minimum deposit of £1,000.
Interest is paid on maturity and earlier access is only permitted on closure with 30 day’s notice. No interest will be paid if the account is closed before the first anniversary. A one percent loss of interest will be applied if closed after the first anniversary.
Hodge Bank is also offering a competitive rate on its Two Year Fixed Rate Cash ISA at 4.41 percent.
Savers need a minimum deposit of £1,000 to launch the account and interest is paid on the anniversary. Earlier access will be subject to a 180-day loss of interest.
Commenting on the market, Rachel Springall, finance expert at Moneyfacts, said: “Savers looking to secure a guaranteed return may be disappointed to see average fixed rates on bonds and Cash ISAs drop to their lowest levels in over a year.
“Those savers coming to the end of their fixed deal will find average rates are more than one percent lower across one-year and longer-term fixed bond and Cash ISAs than a year ago.”
Ms Springall suggested now is the “crucial” time for savers to review their existing portfolios. She explained: “Variable rates have not been immune to rate cuts over the past few months, so savers should proactively move their pots if they are getting a poor return on their hard-earned cash.
“Savers need to stay vigilant as providers will no doubt be assessing their market positions over the coming weeks and will be eyeing up the upcoming Budget to see how this may impact future rate expectations.”
