West Brom Building Society has increased the interest rate on its 60-day notice ISA to 5.1 percent, earning an “excellent” Moneyfacts rating.
Notice accounts are seen as a middle ground between easy access and fixed rate savings accounts.
These accounts allow people to withdraw money if they need to, but they have to give the bank an agreed amount of notice or they could face penalties.
Savers can launch West Brom’s WeBSave 60-day Notice ISA (Issue Two) with just £1 and interest can be paid monthly or annually.
Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Following last week’s launch, West Brom Building Society has increased the rate on its WeBSave 60-Day Notice ISA (Issue Two), which now pays 5.1 percent yearly.
“There is also a monthly interest option for savers who wish to boost their income, paying 4.98 percent gross/5.1 percent AER. The account maintains a competitive place in its sector and may be ideal for savers who don’t mind giving notice to access their cash.”
Although earlier access is permitted, Ms Eastell noted: “It is subject to a full 60 days’ loss of interest, so it is wise for investors to carefully consider whether it’s worthwhile.
“Additions can be made at any time and investors can make transfers in from multiple different ISAs. Overall, the deal earns an Excellent Moneyfacts product rating.”
But while West Brom’s account is currently leading the market, the competition doesn’t fall too far behind.
Furness Building Society is also offering a 60-day Notice ISA but with a lower interest rate of 4.1 percent. The account can be launched with a minimum deposit of £1,000 and interest is paid yearly.
Harpenden Building Society is offering a marginally higher interest rate but a shorter notice period of 45 days. The ISA pays an AER of 4.55 percent yearly and similar to Furness BS, a minimum deposit of £1,000 is required to open.
During the current period of frozen allowance thresholds and high interest rates, Jeremy Cox, head of strategy at Coventry Building Society, said: “Millions of savers will be hit with a shock tax bill or stealth changes to their tax codes as they exceed their Personal Savings Allowances in this tax year.
“The OBR’s estimates are a clear sign that people should take urgent action to review their finances and start actively managing their tax-free savings.
“The good news is it’s surprisingly straightforward to shelter savings from income tax by using tax-free ISAs. Everyone can save up to £20,000 in an ISA each tax year and any interest payments will be shielded from income tax from then on.”
Without the protection of an ISA, Mr Cox said higher rate taxpayers need just £10,000 earning a ‘best buy’ rate of five percent before the interest they receive uses up their £500 Personal Savings Allowance.
After that, he noted that they would be hit with a 40 precent tax on any additional interest they are paid.
Mr Cox continued: “Tax bills will steadily rise for anyone with non-ISA savings that has exceeded their Personal Savings Allowance.”
However, he noted: “There are only a few months left to make full use of this year’s tax-free ISA allowance of £20,000, but a new and completely separate £20,000 allowance for the 2024/25 tax year will be available from April 6.”
