Banks increase ISA interest rates to 4.06 percent

One of the savings accounts by a leading bank is offering customers a 4.06 percent interest rate. An ISA is a savings or investment account that allows savers to put away a certain amount a year tax-free.

Currently, Shawbrook Bank is providing its customers with a 4.06 percent gross / 4.06 percent AER interest rate on its One Year Fixed Rate Cash ISA Bond Issue 68.

This particular account has a term of one year and a minimum opening amount for savers of £1,000.

The maximum investment amount someone can place into the account is the ISA allowance which is £20,000.

Access to the account is permitted but is subject to a 90-day loss of interest penalty, according to Shawbrook Bank.

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Transfers into the account are allowed, with the product accepting Cash and Stocks and Shares ISAs but transfers out are subject to a 90-day loss of interest penalty.

Customers can open and manage the account online but need to be at least 18 years old to qualify for it.

Eleanor Williams, a finance expert at Moneyfactscompare.co.uk, broke down why this account is favourable for customers.

She explained: “Savers who are yet to use their tax-free savings allowance might be tempted by the One Year Fixed Rate Cash ISA Bond from Shawbrook Bank.

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“Following a rate increase this week, this now pays 4.06 percent on anniversary, which sees it take a notable spot in the top 10 when compared to other ISAs currently on offer with similar terms.

“This ISA also offers a monthly interest option, which might be a benefit for those looking to supplement their regular income.

“There is some further flexibility for savers to be able to access their ISA pot, though this is subject to a loss of interest penalty, and this ISA also provides the option to make further additions while the issue remains open, which may also add to its appeal.”

In comparison, Yorkshire Building Society has launched its Limited Access e-Saver ISA with an interest rate of 3.10 percent AER payable yearly.

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The savings expert praised the building society for launching such an “appealing” savings interest rate onto the market.

She explained: “This week Yorkshire Building Society has launched a Limited Access Saver e-ISA which could be an appealing option for savers who are looking to take advantage of their ISA allowance while also maintaining some access to their savings pot.

“Paying a rate of 3.10 percent gross, this ISA takes a place in the top 10 when compared to other variable ISAs currently on offer.

“While this is a no notice product, investors should be aware that access to their savings is restricted, as they can only make withdrawals on one day per account year, so careful planning may be needed.

“This account takes a prominent place in our top rate tables and earns an Excellent Moneyfacts product rating.”