Top rate cash Isa now pays more than a regular savings account as Coventry BS inches up deal to 1.46%
- The building society’s Limited Access Isa previously paid 1.44%
- The best interest-paying easy access accounts pay 1.45%
- Coventry now beats this as it has bumped its rate to 0.01%
- It comes with a bonus rate until January 2021 and limits of 3 withdrawals a year
The top easy access cash Isa now pays a higher rate of interest than the best taxed savings option, after Coventry Building Society bumped its rate up by 0.02 per cent.
The UK’s second-largest mutual’s Limited Access Isa now pays 1.46 per cent, 0.01 percentage points higher than the standard easy access savings options offered by Cynergy Bank, Marcus and Virgin Money.
Al Rayan Bank’s Everyday Saver pays savers a higher 1.6 per cent, but as a Sharia Bank this pays an expected profit rate rather than a rate of interest.
Leapfrog: Coventry Building Society’s 0.02% rate hike means that the highest-paying easy access cash Isa now beats its non-tax-free interest-paying alternative by 0.01%
Coventry initially launched the Isa paying 1.44 per cent at the start of September, which at the time was the joint-top rate in This is Money’s tables, and the top rate for those with balances of less than £5,000.
However, the offer came with a bonus rate of 0.29 per cent which lasted until January 2021, at which point the rate drops to 1.15 per cent, and limits you to three free withdrawals a year.
After the hike by Coventry, the bonus has now been bumped up to 0.31 per cent. At the time it launched, the gap between the best interest-paying easy access account and easy access Isa had narrowed to just 0.01 per cent.
Savers looking for tax-free accounts have for some time suffered from rates that are lower than on standard savings deals.
According to Moneyfacts, over the last three years the difference between the top easy access Isa and easy access savings account has been around 0.15 per cent.
However, in both May and June this year the best variable rate easy access Isa did at least match the best easy access savings account.
Virgin Money recently lifted its cash Isa, which comes without a bonus rate but limits you to two withdrawals a year, to 1.45 per cent, which puts it at parity with the top interest-paying savings accounts.
The closing of the gap is more likely due to a fall in easy access rates rather than a real rise in Isa rates, though we did see some Isa competition earlier this year, with one major high street bank in Santander getting in on the act.
Moneyfacts’ Rachel Springall said: ‘It’s fantastic to see a market-leading Isa launched for customers who want a bit of flexibility with their cash, particularly with a trusted brand.
‘Savers who are looking for a decent return and who may not have utilised their Isa allowance yet may find this an appealing choice.
‘Savers must familiarise themselves with the terms of the account, as it poses withdrawal restrictions and carries a bonus.’
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