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One-year fixed ISA launches but allows you access to your cash

Written by: Paloma Kubiak
A one-year fixed rate ISA has launched giving savers flexibility to withdraw some of their cash without penalty or loss of interest.

Leeds Building Society has upped the return on its 1 Year Fixed Rate Access ISA to 1.05% AER from 1.01%.

While the deal is not market-leading, it allows you to withdraw or transfer up to 25% of your cash without notice or penalty during the term.

If you go over the 25% limit, the account will be subject to 60 days’ loss of interest or an equivalent amount on the sum withdrawn or transferred.

The minimum opening amount is £100 and savers will be able to deposit the 2017/18 maximum ISA limit of £20,000 (less if you have already opened a stocks and shares ISA, Innovative ISA or Lifetime ISA).

The new deal comes with strict time constraints: you can only make deposits for the 2017/18 tax year up until 30 June 2017. It can be opened online, in branch or by post, and operated in branch or by post.

Richard Fearon, Leeds Building Society’s chief commercial officer, said: “Even with a shorter-term fixed rate account, we know savers sometimes need urgent or unexpected access to their nest egg before the end of the term so this feature is an added benefit of the new ISA.”

How does it compare?

Rachel Springall of data site Moneyfacts said: “Some savers might need to withdraw some of their cash in emergencies, so the Leeds BS ISA is a unique way to do that because it allows savers to take out 25% of the original investment. Elsewhere on the market, Barclays offer customers the option to make three withdrawals on their flexible cash ISA.

“There is definitely room for growth in the ISA market for more fixed accounts with some flexibility. Unfortunately, there is no rule for providers to offer such a product, but it would be an attractive feature to catch on with alternative brands.

“Whichever savers decide to choose, it will be worthwhile to take advantage of their Personal Savings Allowance (PSA) in addition to any ISA allowance, because non-ISA rates are typically more attractive.”

The best one-year fixed ISAs on the market come from Al Rayan Bank, which has an expected rate of 1.15%, Bank of Cyprus UK, which pays 1.13% and Shawbrook and Britannia, which both pay 1.10%.

See’s guide on the Personal Savings Allowance for more information.

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