Shawbrook Bank has increased the interest rate on its one-year fixed ISA to 5.01 percent, earning an “excellent” Moneyfacts rating.
The account can be opened with a minimum deposit of £1,000 and interest can be paid either monthly or annually.
Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Shawbrook Bank has increased the rate on its One Year Fixed Rate Cash ISA Bond (Issue 88) this week.
“Savers can receive a competitive 5.01 percent gross/AER and it may appeal to those searching for a guaranteed return who don’t mind locking away their cash for the short term.
“For savers wanting to maximise their income, there is also an option to receive monthly interest paying 4.9 ppercent gross/5.01 percent AER, which may also be appealing.”
Ms Eastell added: “It is possible for consumers to make Cash and Stocks and Shares ISA transfers into the account.”
She noted: “Although early withdrawals are subject to a 90-day loss of interest penalty, savers can make further additions at any time. Overall, the deal earns an Excellent Moneyfacts product rating.”
Shawbrook Bank’s new deal places the provider near the top of the board of one-year fixed ISAs, with just two accounts offering a higher interest rate.
Virgin Money’s Fixed Rate Cash ISA Exclusive (Issue 10) is currently topping the list with an Annual Equivalent Rate (AER) of 5.25 percent.
There is no minimum investment amount to get started, interest is applied annually, and earlier access will be subject to 60 days’ loss of interest.
OakNorth Bank’s Fixed Rate Cash ISA places just below with an AER of 5.02 percent.
The account can be opened with a minimum deposit of £1 and interest can be paid monthly. Savers should feel comfortable leaving the funds in the account until maturity as earlier access will be subject to 90 days’ loss of interest.
Commenting on the market, Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “Savers who prefer to lock their cash into a fixed rate bond or ISA for a guaranteed return will find more than half of the savings market can beat inflation, but they may be disappointed to see the top fixed rates have tumbled over the past month.
“Providers have been particularly active in this space due to the ongoing uncertainties surrounding future rate expectations.”
However, she noted that challenger banks, which sit towards the top end of the fixed bond market, have had to adjust their market positions and “will likely keep a close eye on their margins compared to their peers” in the coming weeks.
Ms Springall added: “Inflation is predicted to come down to around 2.7 percent by Quarter Four (Q4) 2024 and, based on today’s top rates, savers would be able to make a return on their cash on most savings accounts on the market should interest rates hover around current levels.
“Savers who have not reviewed their existing rate would be wise to do, as well as taking time to compare the latest deals on the market and sign up to rate alerts for any table-topping rates.”
