Nationwide launches Isa with market-beating rate

Nationwide has become the first high-street bank or building society to launch a marketleading cash Isa. The Loyalty Single Access Isa pays a variable rate of 1.4pc, beating Charter Savings Bank’s 95-day notice Isa, which was launched last week and pays 1.31pc.

However, Nationwide’s account is only available to customers who have been with the mutual for at least a year. Those who have held a Nationwide account for less than a year can open a Single Access Isa paying 1.3pc.

Both accounts can be opened online, using the Nationwide mobile app or in a branch with a minimum of £1. Only one withdrawal is permitted each year. The two Isas launched yesterday, and both allow old Isa transfers in.

Nationwide’s Loyalty Isa pays a headline variable rate, but with only one withdrawal permitted each year, savers may want to consider a one-year fixed-term Isa for a slightly higher return.

Charter Savings Bank and Oak North Bank both pay 1.46pc for those happy to tie up funds for a year and with a minimum of £1,000 to deposit.

Those who need access during the term will face penalties, so it’s best to avoid these accounts if you’re unsure whether you’ll need the money. Charter Savings Bank customers will need to sacrifice 150 days’ interest, while Oak North Bank charges a fee equivalent to 90 days’ interest.

When Charter Savings Bank launched its Isa last week, paying 1.31pc, it was the highest return on offer since 2016. Average Isa account rates are also increasing, according to Bank of England data. The average variable cash Isa paid 0.27pc in October, compared to 0.91pc now.

This time last year, the best easy-access and notice cash Isas were paying around 1.05pc. Rates began improving in May but stuck around 1.2pc and 1.25pc, and then reached 1.3pc during the autumn.

Isa providers tend to start ramping up rates around February to attract the last of customers’ allowances before the end of the tax year. Tom Adams from Savings Champion, the savings advice site, said of the “bigger high-street names”, Nationwide tends to be “more active” in the Isa market. While there are restrictions with the new accounts, he said the rate on offer is “certainly eye-catching”.

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