Hodge Bank has increased the interest rate on its fixed cash ISA to 4.95 percent, earning an “excellent” Moneyfacts rating.
The account can be opened with a minimum deposit of £1,000 and interest can be paid monthly or annually.
Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Hodge Bank has increased the rate on its one-year fixed ISA this week.
“This may be happy news for savers wishing to utilise their full ISA allowance and receive a guaranteed return as the deal takes an attractive position within its sector.
“However, investors may wish to note that although the deal allows earlier access this is subject to 90 days’ loss of interest so careful planning is ideal.
“Further additions can also be made for 10 working days from the account opening.”
Ms Eastell added: “On assessment, the deal earns an Excellent Moneyfacts product rating.”
Hodge Bank, which was formed in 1987, is headquartered in Cardiff, Wales, and all deposits up to £85,000 are protected by the Financial Services Compensation Scheme.
But while Hodge Bank may be offering a more competitive rate, it isn’t the most competitive deal on the market for this sector. Virgin Money’s Fixed Rate Cash ISA Exclusive (Issue 10) tops the list for one-year fixes with an Annual Equivalent Rate (AER) of 5.25 percent.
There is no minimum investment amount to get started, interest is applied annually, and earlier access will be subject to 60 days’ loss of interest.
Shawbrook Bank’s One Year Fixed Rate Cash ISA Bond (Issue 86) places just behind with an AER of 5.01 percent.
The account can be opened with a minimum deposit of £1,000 and interest is paid on the anniversary. Earlier access will be subject to a slightly larger charge of 90 days’ loss of interest.
The last one-year fixed ISA available with a rate over five percent is Punjab National Bank (International) Limited, which is indeed offering five percent.
The account can be launched with a minimum deposit of £1,000 and interest is paid on maturity. However, earlier access is only permitted on closure and will be subject to 30-day notice and no interest paid.
Commenting on the market, James Hyde, a spokesperson at Moneyfactscompare.co.uk, said: “Following significant falls in inflation in October and November, this time last month there were over 1,100 inflation-beating savings deals available. Despite [Wednesday’s] slight CPI rise and recent rate reductions, there still remain just under 1,000 available that can trump inflation.
“We recently saw the highest month-on-month drop to fixed savings rates in 15 years, but variable rates have remained fairly steady despite the fluctuation of other factors. With some no-notice accounts still paying over five percent interest, their instant accessibility may be a tempting factor for those not wishing to lock money away for a defined period.
“Despite many providers across the sector significantly cutting rates in recent weeks, challenger banks have continued to occupy the top positions in the charts.
“These providers are often able to offer very competitive deals, however their readiness to pull top rates once targets have been hit means it’s imperative to strike while the iron is hot to secure the best deal.”
