Leeds Building society increases rate on popular Cash ISA to 4.41% | Personal Finance | Finance
Leeds Building Society has announced an interest rate increase on its Online Access Cash ISA to 4.41%. The change comes as the mutual released new data showing 58% of people have never switched ISAs, with 35% of those stating they don’t know how. However, this could mean they’ve been missing out on higher returns.
Catherine Wray, senior manager for savings at Leeds Building Society, said: “Cash ISAs are as popular as ever with our members. In 2024, we saw a huge increase in demand for cash ISAs, and new ISA account openings were four times higher than in 2020. As we approach the tax year end, it’s an important time for savers to look at their accounts and ensure their money is working as hard as possible for them.”
Savers can launch the account online with a minimum deposit of £1,000. Interest is paid annually, and withdrawals are not restricted.
Up to £20,000 can be paid in for the 2024/2025 tax year with unlimited transfers from previous years’ ISAs. With over a third of savers unsure how to transfer their ISAs, Leeds Building Society has created a simple step-by-step guide to help.
What else is out there?
While Leeds Building Society may be offering an improved rate, it isn’t currently topping the table for easy access Cash ISAs.
Savings app Chip is topping the table with a 5.26% Annual Equivalent Rate (AER) on its instant access pot.
The rate includes a 0.90% bonus for new customers for the first three months. The account can be opened with just £1, interest is paid monthly, and there are no withdrawal restrictions.
To receive the bonus rate, savers simply need to enter the code “ISASEASON” on Chip’s website. After the initial bonus period, the interest rate will revert to Chip’s standard rate of 4.32% AER, so it’s important for savers to review their accounts regularly to ensure they’re still getting a competitive return.
Investment app Moneybox places just behind with an AER of 5.25%, and savers can launch the account with a minimum deposit of £500. Moneybox’s offer includes a 1.05% bonus rate for the first three months, after which the rate will drop. Up to three withdrawals are permitted per 12-month period, and interest is paid on the anniversary.
Trading 212 joins Moneybox with an AER of 5.25%. The deal includes a bonus rate of 0.75% for three months, and savers can launch the account with just £1. Interest is paid monthly, and withdrawals are not restricted.
UK residents can currently save up to £20,000 a year in an Individual Savings Account (ISA) without paying tax on the interest earned.
These accounts have become particularly popular during the recent period of high interest rates, as millions of savers have been met with hefty tax bills on their nest eggs. In a normal savings account, Britons can typically only earn so much interest before they have to pay tax on it.
However, the generous £20,000 allowance may be under threat, with analysts widely expecting Chancellor Rachel Reeves to target it in her autumn budget this year. The Treasury is reportedly considering ways to reform the tax-efficient savings tool – and slashing the tax-free allowance to £4,000 per year is one controversial suggestion.
Lobbyists have also been calling to scrap Cash ISAs altogether in an effort to divert more money into stocks and shares ISAs and investments that would benefit the wider economy.
Ms Wray said: “The potential changes to the current £20,000 annual allowance on Cash ISAs underlines the importance of people reviewing their savings. It’s crucial that savers don’t overlook the opportunity to open new ISA accounts or transfer their existing savings into another Cash ISA before the tax year ends.
“Many people incorrectly assume that transferring a Cash ISA is prohibited by savings providers, and others are put off by preconceptions that the process is complicated. We hope to be able to support savers to find the best way to grow their nest egg.”
