Paragon Bank has hiked the rate on its one-year fixed cash ISA product to 5.75% in a bid to compete with other banks, including Chase, Starling and Shawbrook Bank.
This comes after Paragon already hiked its double easy access savings rate to 4.75% in response to the Bank of England (BoE) raising interest rates to 5.25%.
Derek Sprawling, Savings Director at Paragon Bank, said: “Paragon is pleased to support people looking to build up their tax-free savings by offering a range of competitive cash ISAs that are suited to all needs.”
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Find out if the new Paragon one-year Fixed ISA rate competes well with the top rates on the market, plus how the ISA works.
Paragon Bank one year fixed cash ISA
If you’re looking to stash money away tax-free, a one-year fixed ISA is a great option. The Paragon one-year fixed ISA offers a rate of 5.75% and it can be opened with just £500. The new rate is available to new and existing customers.
A unique ISA wallet feature also comes with the Paragon Bank ISA. Sprawling says: “Our ISAs are designed with flexibility in mind – with our ISA Wallet feature providing savers the opportunity to split their ISA allowance across different ISA accounts.
On top of this, Paragon also offers a ‘flexibility’ feature on our easy access ISAs that allow customers to replace funds withdrawn from an ISA without their allowance being impacted.”
Although the rate increase is good for savers, Virgin Money still beats the new rate. You can earn 5.76% in the Virgin Money one-year fixed ISA, which can be opened with just £1.
Virgin Money is also one of the more reputable and trusted banks, however, know that their rates change quickly on their savings products. So if you want to bag this top rate, you shouldn’t sit on it.
Below Paragon is Charter Savings Bank offering 5.72% on its one-year fixed ISA, but it requires a minimum deposit of £5,000.
What to consider before opening an ISA
Fixed-rate ISAs lock your money away for one to three years depending on what term you opt for. So, before you open an ISA, it’s worth considering the following.
- Are you ready to lock your money away for a fixed period? If you open a fixed-rate ISA, the interest you earn is also fixed for that time frame. But if you withdraw money within the fixed period, you’re likely to receive a penalty for example a reduction in the interest you earn.
- If you do want access to your money, open an easy-access ISA which gives you the freedom to withdraw funds without a penalty. Current easy access ISA rates are topping 4.3%.
Read more on how to invest like an ISA millionaire.
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