OAKNORTH Bank has launched two new chart-topping Isa accounts that will pay savers up to 1.96 per cent on their cash.
The catch? You’ll need to be prepared to lock your savings away for two to three years before cashing in on the best rates.
Getty – Contributor Oaknorth Bank is offering savers a boost with two new fixed-rate accounts
The digital-only bank launched both mid-term Isas a week after we reported how it upped the rate on its year long fixed-rate Isa making it top of the leader board.
The top rate of 1.96 per cent, which is also offered by Shawbrook Bank, will be paid to customers who take out a 36-month – or three years – fixed-rate account.
That means on savings worth £5,000 you’ll earn £302.56 in interest or £605.12 on £10,000.
It’s only worth it though if you know that you won’t need to withdraw the funds before the end of the term.
Oaknorth All three of Oaknorth’s fixed-rate accounts are chart-toppers
If you do, you’ll forfeit 270 days worth of interest. Because the rate is paid monthly, the amount you will lose out on depends on how far into the term you decided to pull your money.
This is because you earn interest on the previous month’s interest.
For example, if you withdraw cash on savings worth £10,000 after a year then you’ll lose out on £543.45, compared to £1,147.50 after two years.
If three years is too long for you to lock away your money, the bank has also launched a two-year fixed rate account that offers the top rate of 1.94 per cent.
You will have earned £200.14 on £5,000 savings, while £10,000 savings will be boosted by £400.28.
But if you decide to make a withdrawal before the end of the two years, you’ll forfeit 180 days interest.
The next best rate on a similar account is 1.91 per cent from Shawsbrook Bank.
HOW DO YOU SWITCH ISA PROVIDERS?IF you’re in the market for a new, better paying Isa, there’s one thing you shouldn’t do.
Never withdraw money from your Isa account to put it into your new one – if you do it’ll lose its tax free benefits.
Instead you need to follow the simple transfer process.
Make sure that the new account you want to use accepts transfers (not all do) and then fill in the Isa transfer form with the new provider.
It will arrange for your savings to be transferred over, with the process taking no more than 15 working days.
And remember, you can only have one “active” Cash Isa per tax year.
You’ll also need £1,000 to open the account.
Andrew Hagger of Moneycomms said: “OakNorth may not be a familiar name to many savers but this challenger bank is rapidly building a reputation for offering best buy savings rates, both ISA and non ISA.
“These fixed rate bonds are a good option for savers who have already used their personal savings allowance and have enough cash put aside for emergencies.
“The one and two year options will probably appeal most as the three year deal may prove too long for some savers, particularly as it only offers 0.02 per cent more than the two year Isa fix.”
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Rates for savers may be creeping upwards, but they’re nothing like they were 28 years ago banks when banks were paying 14.875 per cent interest.
But that’s because the Bank of England has set the base rate super low at just 0.75 per cent to counter economic uncertainty.
Check out our guide to the savings accounts that offer the best rates here.
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