While the Bank of England Base Rate rests at a 14-year high of four percent, cash ISAs have been offering savers some of the highest returns seen in decades. Virgin Money’s two-year fixed cash E-ISA is currently affording savers an Annual Equivalent Rate of four percent, earning it an “excellent” rating from money comparison site, Moneyfacts.
Commenting on the ISA market, Rachel Springall, finance expert at Moneyfacts, said: “Savers have just a couple of months left until the new tax year begins, so time is ticking for them to utilise their current ISA allowance. Thankfully, the run-up to ISA season is looking bright as rates are much more favourable than they were a year ago.”
She noted that the top fixed rate ISAs are paying more than four times the amount of interest than a year ago, however, savers will need to check their rate “regularly” to keep on top of the latest rate rises.
She added: “Remember that they can look for an alternative deal that allows them to transfer in their current ISA to keep their tax-free wrapper intact.”
Interest rates have been fluctuating recently, but fixed-rate accounts can help add a layer of certainty to saving, as these enable savers to secure the rate offered at the time of opening.
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Cash ISAs also come with their own perks, as these accounts allow up to £20,000 to be deposited per year, without having to pay tax on the interest above the Personal Savings Allowance (PSA).
Virgin Money is currently offering savers an AER or four percent on its Two Year Fixed Rate Cash E-ISA (Issue 554). Interest is calculated daily and savers get to decide whether they’d like it to be paid either annually or monthly.
Commenting on the deal, Eleanor Williams, finance expert at Moneyfacts, said: “Savers who are still looking to use up their tax-free savings allowance might be tempted by the Two Year Fixed Rate Cash E-ISA Issue 554 from Virgin Money. Launched this week, this pays four percent yearly, or alternatively, there is also a monthly interest option, which might be another positive for investors who want to boost their regular income.
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“This ISA takes a place in the top 10 compared to others currently on offer with similar terms and there is also an element of flexibility for savers as earlier access is permitted, however, this is subject to a loss of interest penalty.”
She continued: “Investors are also able to make further additions and transfers in for 30 days from account opening, which could improve the appeal of this account further. On assessment, this earns an Excellent Moneyfacts product rating.”
The account can be opened with just £1 and savers must be 16 years or over. Those who invest in Virgin Money accounts can also have access to special deals across the wider Virgin Group that can help people save on items like everyday essentials, as well as days out and holidays.
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This account requires a minimum deposit of £1,000 to open and profit is paid annually. However, withdrawals within the two-year term will be subject to a reduction in profit of 180 days.
Close Brothers Savings Two-Year Fixed Rate Cash ISA can be opened with a minimum deposit of £10,000 and interest is paid annually and at maturity.
Early access is not permitted but in the event of this, the full amount must be withdrawn and penalty fee of 150 days’ interest will be applied.
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