This new five-year fixed rate ISA also allows you to access a quarter of your savings early.
Leeds Building Society has launched a new market-leading Cash ISA paying 2.85% over five years.
It can be opened with just £100, and you can save up to the current Cash ISA limit of £5,940. And between 1st July and 31st July you can add more money up to the New ISA tax year limit of £15,000.
One unique feature of this ISA is, in common with other Leeds savings products, the option to withdraw up to 25% of your money during the fixed rate period. So if you save £1,000, you can access £250 at any time.
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Best buys getting worse
However, while this ISA is a new best buy, the top five-year fixed rate has actually fallen over the past six months.
Here’s how it's changed.
|
Month |
Top five-year Cash ISA interest rate |
|
October 2013 |
3.05% |
|
March 2014 |
3.00% |
|
May 2014 |
2.85% |
How it compares
Here’s how the Leeds ISA compares to the other leading fixed rate best buys.
|
Account |
Interest rate (AER) |
Minimum deposit |
Length of fixed rate |
Notes |
|
Leeds BS Five-Year Fixed Rate ISA |
2.85% |
£100 |
Fve years (fixed until 30th June 2019) |
New subscriptions only. |
|
Coventry BS Fixed Rate ISA |
2.75% |
£5,940 |
Fixed until 31st May 2018 |
New subscriptions only. |
|
Principality BS Five-Year Fixed Rate ISA |
2.75% |
£500 |
Five years |
Transfers and new subscriptions. |
|
Skipton BS Online Five-Year Fixed Rate ISA |
2.75% |
£500 |
Five years (fixed until 9th June 2019) |
Transfers and new subscriptions. |
Again, these rates have dropped, with the exception of Coventry Building Society’s 2.75%, although this ISA’s term has increased from three and a half years to four years.
[SPOTLIGHT]But these other ISAs don't have the advantage of offering you access to a quarter of your savings early.
However, if you had an ISA from Coventry Building Society in February 2013, you're entitled to its ISA Reward, which is an instant access ISA paying 2.50%.
Other options
If you're a non- or Basic Rate taxpayer and/or you don't fancy locking your money away for years, you might want to consider some other options, such as current accounts.
TSB's Classic Plus account pays 5% permanently on balances of up to £2,000, providing you credit the account with £500 a month. And you can have two accounts per person.
Nationwide’s FlexDirect account pays 5% interest on balances up to £2,500 for the first 12 months. The only condition is you need to pay in at least £1,000 a month.
Lloyds Bank is offering the Club Lloyds account, which pays 4% on balances between £4,000 and £5,000, providing you credit the account with £1,500 a month and set up two direct debits from it.
If you don't want to move your money around, Santander’s 123 account pays 1% on balances over £1,000, 2% on balances over £2,000 and 3% on balances from £3,000 to £20,000. You need to pay in £500 a month, and set up at least two Direct Debits. There's also a £2 monthly fee on the account but you can earn cashback on some of your direct debits for household bills.
And Bank of Scotland's Classic Account with Vantage pays 3% on balances of between £3,000 and £5,000 so long as you pay in £1,000 a month. You can have up to three accounts too.
You could also look at peer-to-peer savings, where you lend money to other people or businesses via a third party website. The likes of RateSetter, Lending Works and Zopa are all paying over 5% if you're prepared to lock your money away for five years.
For a more in-depth rundown of the options out there, take a look at Where to earn most interest on your cash.
More on saving and investing:
Where to earn most interest on your cash