You are here: Home - Saving-Banking - News -

New market-leading ISA launches

0
Written by:
05/03/2019
Coventry Building Society has boosted the rate on its easy access ISA, taking it to the top of the best buy tables.

With only a few weeks to go until the ISA allowance deadline, Coventry BS is now offering 1.50%, which is only 0.01 percentage points shy of the market-leading easy access non-ISA rate from Family Building Society.

You can set up a Coventry ISA with as little as £1 but it can only be opened online.

The fixed rate includes a bonus of 0.35% until 31 July 2020 so you’ll need to make a note of this date and switch if the deal is no longer competitive.

Competition has been slowing improving in the easy access ISA space, with the best deal now paying 0.20 percentage points more than this time last year.

ISA rates in general have been poor for the past few years following the introduction of the personal saving allowance (PSA) in 2016, which lets basic rate taxpayers earn up to £1,000 (£500 for higher rate taxpayers) in savings income tax-free.

As tax-free saving was one of the key benefits of the cash ISA, their appeal declined with the arrival of the PSA and so too did the rates on offer.

But there are signs of a turnaround.

“Since the start of 2019, ISA providers have gradually launched new deals in advance of a peak season, and right now it is hoped that competition will increase leading to even more deals as we head closer to the new tax year,” said Rachel Springall, finance expert at Moneyfacts.

ISAs v savings accounts

The PSA means most people no longer pay any tax on their savings so for them, the best rate should be the main consideration.

At the moment, rates are better on non-ISA deals, but the situation could change, especially if competition among ISA providers continues to heat up.

For some people, however, a cash ISA could be a better option. Additional rate taxpayers (45%) who earn above £150,000 are not eligible for a PSA but they can still save tax free in an ISA.

Also, people with big savings pots who go over their PSA threshold can save into an ISA tax-free (cash ISAs do not count towards your PSA, they can be held in addition).

It’s also worth noting that the PSA is not guaranteed to be around forever, and if interest rates start to increase, savers could soon start to breach their £1,000 or £500 PSA limit.

Savers have until the end of the tax year – 5 April – to use their 2018/19 ISA allowance, which is £20,000. The ISA allowance will not change for next year.

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week