The challenger paying 4X more on cash ISA holdings
The average annual earnings on the maximum £20,000 ISA deposit for an instant, 12 month and 24 month fixed term deposit cash ISA is £169, £245 and £542 respectively.
But some better known high street banks and building societies, such as Santander and Principality BS, pay less than £50 in interest a year on a £20,000 balance in their instant cash ISA.
Yet in comparison, newer challenger banks are enticing savers with more attractive rates of interest, which could mean an extra £200 in your pocket.
Andrew Hagger, personal finance expert at Moneycomms, said: “Savers are constantly urged to shop around but many don’t take action because they don’t think it’s worth the hassle. However, the difference in rates offered by high street banks and the lesser known challenger banks is much wider than people realise.
“If somebody told a customer of a high street bank that they could earn £271 per year instead of £70 on their £20,000 nest egg and still benefit from the Financial Services Compensation Scheme (FSCS), I’m sure most would jump ship in an instant.
“Just because you’re not familiar with a challenger bank don’t dismiss it out of hand – in some cases, you could almost quadruple your annual interest income without taking any risk.”
For savers needing instant access to their ISA cash, challenger and Sharia-compliant Al Rayan Bank tops the best buy tables with its 1.35% expected profit rate, though this is different to a guaranteed rate of interest. See YourMoney.com’s Market-leading Sharia savings accounts: should you consider them? for more information.
If you’re looking to tie up your money for a year, the top paying 12-month fixed cash ISA is also offered from Al Rayan – 1.61% expected profit rate. And it’s 24-month equivalent also comes top of the league, offering 1.80% expected profit, generating an average £194 extra (upon maturity) than high street names.
Related: See YourMoney.com’s Should I entrust foreign banks with my savings? for further information.