Two easy-to-access, best-buy cash Isas launched by Coventry and Skipton paying more than 5%
- Coventry Building Society has increased the interest rate on its cash Isa to 5.05%
- While Skipton Building Society has increased its cash Isa rate to 5%
Coventry and Skipton Building Society have entered a battle for easy access, best buy cash Isa.
Coventry has raised its rate to 5.05 per cent, while Skipton has raised its cash Isa rate to 5 per cent.
It comes a few weeks after both mutuals launched these accounts, taking them to the top of best buy charts.
Both rates have increased from 4.9 per cent, and if you opened either of these accounts a few weeks ago at this rate, you will automatically receive the new rates of 5.05 per cent and 5 per cent that building societies told This is Money.
Best Buy Isa duel: Coventry Building Society and Skipton Building Society have increased the rates on their cash Isa accounts
Coventry’s Four Access Cash Isa now has the market-leading rate at 5.05 per cent.
But as the name suggests, it only allows four withdrawals in a 12-month period from the account opening date.
If you make a fifth withdrawal, you will lose 50 days of interest. With the maximum deposit of £20,000, that’s almost £151.
If you can afford to give up the flexibility of unlimited withdrawals, this is the best rate you can get with an easy-access cash Isa.
The Skipton account, on the other hand, has no limit on the number of withdrawals you can make, making it a truly easy-to-access account.
But savers should be aware that the Skipton account has a bonus rate for the first 12 months of 1 per cent, so the rate will then fall to 4 per cent.
Both accounts can be opened from £1 and allow you to deposit £20,000 each tax year, so you’ll have until April 2024 to max them out. Both accounts also allow transfers from other Isas.
Which account has the advantage?
Andrew Hagger, founder of MoneyComms, says: “It’s very close.” If he is willing to open and manage the account online and is confident that he will not make more than four withdrawals, then Coventry simply beats him because of the fee.
The Skipton deal can be opened online but also by post, telephone and in a branch, so may have a slightly wider appeal.
Hagger points out that all six of the main easy-to-access cash Isas at the moment have some kind of withdrawal restriction or bonus element built in.
He says: ‘If you’re looking for a completely clean, no-strings-attached Isa, then Shawbrook Bank is the best deal at 4.93 per cent.
“If we look at a maximum cash Isa balance of £20,000, Shawbrook would earn you £986 interest in a year compared to £1,010 with Coventry’s 5.05 per cent deal, so if you have any doubt about the number of times you go If I had to resort to your account for 12 months, I would opt for the Shawbrook deal.
The cash Isa rates being increased are a response to demand for higher interest on tax savings.
Rising interest rates over the past year and a half have generally been good news for savers who can now get accounts that pay interest above 5 percent.
But rising rates have proven to be a double-edged sword, putting many more savers at risk of defaulting on their personal savings allowance (PSA).
At least a million more savers are expected to pay cash for their savings as a result of the higher rates.
Basic rate taxpayers can earn up to £1,000 a year in interest before having to pay tax on their savings accounts, while higher rate taxpayers have a PSA of £500.
Those who pay additional tax (earning more than £125,140 a year) receive no personal savings allowance.
That’s why many more savers are choosing to shelter their savings in tax-free Isas.