Cash ISAs and instant-access savings accounts are offering their highest interest rates since early 2016, as savers finally get some relief from years of low returns.
According to new data from Which?, one-year fixed-term bonds were up to an average rate of 1.42 per cent in October 2018, and instant-access accounts had an average rate of 0.62 per cent. The last time these interest rates were recorded was in January 2016.
Meanwhile, the average one-year Cash ISA was paying an average of 1.3 per cent in October, and instant access Cash ISAs were offering an average of 0.91 per cent – the highest since March 2016 and July 2016, respectively.
Compare the Best ISA Rates
Which? analysts have speculated that the rise in interest rates is connected to the recent changes in the base rate, as well as competition from new banks such as Marcus, which launched a 1.5 per cent instant-access savings account earlier this year.
In response to Marcus Bank’s offer, Nottingham Building Society launched a new instant-access account paying 1.55 per cent. However, it was withdrawn after two days due to high customer demand.
Leeds Building Society and Virgin Money were offering the highest rates on Cash ISAs in October, with both accounts paying 1.38 per cent. However, in order to avail of the Leeds offer, savers must maintain a balance of at least £1,000. The Virgin Money account only allows two withdrawals per year.
Charter savings account and the Shariah-compliant Al Rayan Bank offered the highest-paying one-year Cash ISA in October, with rates of 1.6 per cent on balances of £1,000.
Meanwhile, My Community Bank had the top-paying one-year bonds in October, with returns of 2.1 per cent on balances of £1,000 or more.
Also published on Medium.