Nationwide launches new ISAs paying as much as 4.25%
The building society has launched two new accounts paying 4%
Nationwide announced it is launching a one-year single access ISA and a one-year single access saver(Image: Maca and Naca via Getty Images)
Nationwide has unveiled a new range of ISA deals paying up to 4.25%, giving savers a fresh chance to boost returns on their tax-free cash.
The building society has launched two new accounts paying 4% and increased rates across its fixed-rate ISA range in what analysts say is a welcome sign of competition in the savings market. But experts warn the headline rates come with a trade-off – as some accounts restrict access to cash or require savers to lock their money away for years.
Nationwide said it is introducing a one-year single access ISA and a one-year single access saver, both paying 4% interest. At the same time it is raising rates across its fixed-rate ISA range, including a new five-year deal paying 4.25%.
The changes come into effect from today and replace the society’s existing one-year triple access ISA and saver, which currently pay 3.30%.
Nationwide ISA rates
Richard Stocker, head of savings at Nationwide, said the move was designed to deliver better value for members.
He said: “We’re pleased to be increasing rates across our ISAs and our instant access savings product, giving members even more long-term value and meaningful benefits. Combined with our Branch Promise, we’re proud to be bringing even more value to the high street, further demonstrating our commitment to offering positive, competitive rates for our members.”
FinancIal advisers say the deals offer respectable returns compared with many big banks. Rob Mansfield, independent financial adviser at Rootes Wealth Management in Tonbridge, said: “These are decent rates for cash and welcome competition in the market but if you’re looking at tying your money up for five years, you could do well to also consider investments, as they could be a better hedge against inflation.
“Part of the attraction of cash is how accessible it can be and a five-year bond takes that flexibility away.”
Others say the new deals highlight a growing trend where banks offer higher rates but restrict withdrawals.
Jordan Reid, chartered financial planner at Serenity Financial Planning, told Newspage: “Nationwide’s move is a classic ‘give and take’ that reflects a tightening savings market. By bumping rates to 4% and above, they are clearly making a play for market leadership and rewarding member loyalty.
“However, the shift from ‘triple access’ to ‘single access’ is a significant pivot, as they are essentially offering a higher price in exchange for locking your money away more strictly.
“For savers who are confident they won’t need to touch their cash, these are some of the most competitive rates we’ve seen on the high street this year. But for those using their ISA as an emergency fund, that ‘single access’ catch is a high price to pay.”
Advisers also warn that tying up cash for too long may not always be the best strategy. Ross Lacey, director and independent financial adviser at Fairview Financial Management in Rayleigh, said: “It’s hard to justify locking away cash for long periods of time.
“Cash is there for liquidity and flexibility so although a fixed rate may work well for a known expenditure item coming up in the next two years – a tax bill or mortgage payment – we’d encourage those with cash to consider ways to make their money work harder, like investing, where it’s not going to be needed for a few years.”
The new accounts arrive as banks battle for savers’ cash ahead of the new ISA tax year starting in April, when adults can once again shelter up to £20,000 from tax.
