Good news for savers a specialist bank has relaunched a popular fixed rate cash ISA product offering Britons a higher return for their cash for longer.
The offer is valid from today; however, savers are warned it may not be around for long, so they should act fast
Paragon Bank has relaunched its popular 15-month fixed rate cash ISA, offering savers a competitive 4.28 per cent interest rate.
The "competitive" fixed-term ISA allows customers to lock in their tax-free savings for longer than the typical 12-month products.
Savers can deposit between £500 and £500,000, with interest paid either monthly or annually.
The account became available today, July 17, through the bank's online channels and post for a limited period.
The relaunch comes as fixed-rate ISAs gain traction among British savers. Recent CACI data reveals fixed term ISA balances increased from £219.3 billion to £224.6 billion between April and May, whilst instant access variants grew more modestly from £185 billion to £186.5 billion.
The account requires a minimum deposit of £500 and allows multiple deposits within 28 days of opening, up to the maximum balance.
Customers can transfer existing ISAs or make deposits via electronic bank transfer or cheque.
GETTY | Britons are looking to boost their savingsEarly withdrawals are permitted but incur a penalty of 120 days' loss of interest. The ISA operates as a flexible account, meaning withdrawn funds can be reinvested within the same tax year without affecting the annual ISA allowance, subject to HMRC guidelines.
Account holders must be aged 18 or over and UK residents for tax purposes. The bank offers both online and postal management options, with customers receiving written notification before maturity with instructions for their next steps.
Andrew Wright, Paragon Bank Head of Savings, said: "We're delighted to be able to relaunch our popular fixed-rate 15-month ISA, paying a highly competitive rate of 4.28 per cent.
"This account is perfect for customers who want the assurance that they'll receive a good rate on their savings for a longer period, especially as we're likely to see more Bank of England Base Rate reductions over the next year."
GETTY | ISAs are useful tools for those looking to save more than the personal savings allowance threshold without having to pay tax A new 15-month savings account offers a fixed rate of 4.25 per cent, meaning a £1,000 deposit would grow to £1,053.83 by the end of the term, assuming no withdrawals or top-ups.
The fixed rate cannot change during the term, giving savers a sense of security amid expectations that interest rates may begin to fall later this year.
The offer comes shortly after Chancellor Rachel Reeves confirmed she would not go ahead with proposed cuts to the annual cash ISA allowance during her Mansion House speech on Tuesday.
Reports had suggested the £20,000 annual tax-free savings limit might be reduced to £4,000, sparking concern among consumer advocates who argued the move would unfairly punish cautious savers relying on ISAs to protect their nest eggs.
By maintaining the existing ISA limit, the Government has avoided a clash with middle-income households seeking stability in an uncertain financial climate.
GETTY | The Chancellor wants to encourage Britons to shift money from cash ISAs to stocks and shares ISAs to boost UK businesses
The Chancellor wants to encourage Britons to shift money from cash ISAs to stocks and shares ISAs to boost UK businesses.
However, she confirmed no immediate changes to cash ISA limits, a decision welcomed by campaigners including Money Saving Expert Martin Lewis.
Brian Byrnes, head of personal finance at saving app Moneybox, said cash ISAs are "not, and never have been, a blocker to investing," describing them instead as "a gateway."
Reeves indicated she would "continue to consider further changes to ISAs" without specifying what these might entail.