Nationwide is offering a competitive 4.25 percent interest on cash ISA | Personal Finance | Finance

With the new tax year comes a new ISA allowance, meaning many Britons may be searching for a new product offering more lucrative returns than the last to better position themselves for the year ahead. Nationwide is currently offering a competitive interest rate on its two-year fixed cash ISA, and savers can get started with £1.

Cash ISAs come with additional perks and benefits, as these accounts allow savers’ money to grow without the need to pay tax on the interest above the Personal Savings Allowance (PSA).

Products offering a fixed rate can also help add certainty to saving, as these accounts allow people to lock in the rate offered at the time of opening.

However, cash ISAs can come with a few more restrictions, such as penalty charges for early access or transfers, or a specific deposit amount required per month. This makes it a better option for those who can afford to put money away for longer periods of time without dipping in.

Nationwide’s Two Year Fixed Rate ISA is currently offering an Annual Equivalent Rate (AER) of 4.25 percent.

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Interest is calculated daily and paid on the anniversary of the account opening. Savers must be 16 or over and have at least £1 to deposit. Up to the maximum annual ISA allowance, which is currently £20,000 for the 2023/24 tax year, can be invested.

Withdrawals are permitted, however, all of the money has to be withdrawn and the account will have to close. An early access charge will also be applied, which will be equivalent to 180 days’ interest.

But while Nationwide is offering a particularly appealing product, it isn’t quite topping the table.

The account offering the current market-leading rate for two-year fixed ISAs is UBL’s with an AER of 4.3 percent.

Matching that interest rate, Shawbrook Bank’s Two Year Fixed Rate Cash ISA Bond (Issue 69) is also offering an AER of 4.28 percent.

This account can be opened with a minimum deposit of £1,000 and interest is paid either monthly or annually. However, should any funds be needed early, a fee of 180 days’ interest will be charged.

Finally, placing just ahead of Nationwide with an AER of 4.25 percent is Virgin Money’s Two Year Fixed Rate Cash E-ISA (Issue 561).

Savers who invest in Virgin Money accounts can also have access to special deals across the wider Virgin Group that can help people save on items like everyday essentials, as well as days out and holidays.

The account can be opened with just £1 and interest is applied annually on August 5, while those who opt for monthly payments will see interest applied on the last day of the month.

Any withdrawals made within the fixed rate period will be subject to a charge equivalent to 90 days’ loss of interest on the amount withdrawn.