NATIONWIDE has launched two new ISA products with one offering 4.25% interest – though experts have warned it’s “hard to justify locking away cash for long periods of time”.
The bank is introducing a new single access ISA and is increasing rates across its fixed rate ISA range, with changes taking effect from today.
Nationwide is launching two new accounts, both offering members a competitive return. A one-year single access ISA and a one-year single access saver with 4% interest each.
It will also increase rates on its one, two and three-year fixed rate ISAs to 4.05% and its five-year fixed rate ISA to 4.25%.
Nationwide said it would withdraw its existing one-year triple access ISA and one-year triple access saver, both currently priced at 3.30%.
Richard Stocker, Head of Savings at Nationwide, said: “We’re pleased to be increasing rates across our ISAs and our instant access savings product, giving members even more long‑term value and meaningful benefits.
“Combined with our Branch Promise, we’re proud to be bringing even more value to the high street, further demonstrating our commitment to offering positive, competitive rates for our members.”
It’s hard to justify locking away cash for long periods of time
Experts welcomed the new products and increased interest rates, but warned that locking your cash away for five years is very inflexible.
Ross Lacey, Director & Independent Financial Adviser at Rayleigh-based Fairview Financial Management, said: “It’s hard to justify locking away cash for long periods of time. Cash is there for liquidity and flexibility so although a fixed rate may work well for a known expenditure item coming up in the next two years – a tax bill or mortgage payment – we’d encourage those with cash to consider ways to make their money work harder, like investing, where it’s not going to be needed for a few years.”
Jordan Reid, Chartered Financial Planner at Serenity Financial Planning, said Nationwide’s offer does come with a catch.
He added: “Nationwide’s move is a classic ‘give and take’ that reflects a tightening savings market. By bumping rates to 4% and above, they are clearly making a play for market leadership and rewarding member loyalty.
“However, the shift from ‘triple access’ to ‘single access’ is a significant pivot, as they are essentially offering a higher price in exchange for locking your money away more strictly.
“For savers who are confident they won’t need to touch their cash, these are some of the most competitive rates we’ve seen on the high street this year. But for those using their ISA as an emergency fund, that ‘single access’ catch is a high price to pay.”
Nationwide’s move is a classic ‘give and take’
Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said the rates are “decent”.
He continued: “These are decent rates for cash and welcome competition in the market but if you’re looking at tying your money up for five years, you could do well to also consider investments, as they could be a better hedge against inflation.
“Part of the attraction of cash is how accessible it can be and a five-year bond takes that flexibility away.”
Photo by Fer Troulik on Unsplash.
