Bank increases savings interest rate in ‘very attractive’ offer | Personal Finance | Finance
The rate has been increase for the third time this year with Paragon Bank stating that the move was done to enhance its “competitive features” and to support ISA savers. With this ISA, savers can make up to three withdrawals in a 12-month period without affecting their interest rate. The fourth withdrawal will reduce the interest rate to 0.25 percent.
Paragon added the new rate will be available for customers, both existing and new, for the Triple Access ISA from today.
The provider stated the increase of the rate added to its “competitive ISA range and features” available as it is “keen” to issue to support to savers.
Derek Sprawling, Savings Director at Paragon Bank, said: “We see ISAs as an important part to a portfolio of savings, which is conveniently created through our ISA Wrapper and features within our Flexible ISA.
“It’s important at Paragon we provide our customers with valuable return on their savings and continue to support the cash ISA segment, an important tool for proactive savers.”
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Paragon stated the estimated balance of the account, based on a deposit of £1,000 over 12 months with no withdrawals would sit at £1,012.
The balance for an account which had made four withdrawals would be £964.71.
Rachel Springall, finance expert at Moneyfacts, said it was a “great” move to see a rise in activity in the ISA market.
She added Paragon had made a “notable improvement” to its Trriple Access ISA.
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The bank had relaunched its Triple Access Account ISA in February 2022 where it offered a “competitive rate” of 0.65 percent AER variable.
In April, they increased it again with a rate of 0.80 percent.
However, Ms Springall said the new rate has now secured a “market-leading position” in the variable rate ISA sector.
She added: “As its name suggests, savers must be comfortable with the account terms as the deal will pay 1.20 percent so long as savers do not make more than three withdrawals in a 12 month period.
“Savers can invest from as little as £1 and also make transfers in from Cash ISAs or Stocks and Shares ISAs.”
Ms Springall explained one useful feature is that savers can split their ISA savings across multiple ISAs within Paragon’s range.
This can be useful for those hoping to split their ISA pot, for example, in the hopes of securing a higher rate within a fixed ISA product.
The offer is available as long as Britons keep within their ISA allowance.
Paragon also stated that its flexibility feature was another benefit as it allows any funds withdraw from an access ISA to be added back into the ISA within the same tax year without the year’s allowance being impacted.
Ms Springall concluded: “Overall, it is a very attractive offer and will likely appeal to savers who may need dip into their savings in an emergency.
“Otherwise if savers need more flexibility they would be wise to compare alternative ISAs that do not pose a withdrawal limit.”
To open this flexible ISA, savers need a single pound to start earning interest and must do so online.
Currently, Paragon offer rates of between 1.35 percent and 1.75 percent for its one year to five year fixed rate ISAs.
The Bank of England announced in May that its interest rates had hit one percent which was the highest the UK had seen in 13 years as it battles with rising inflation.
The rate increase should benefit savers but will hit mortgage borrowers and businesses, who face higher borrowing costs.
The next announcement is to come on June 16, 2022, with many expecting another rise as the UK battles against an inflation level of nine percent.
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