Leeds Building Society has stormed to the top of the savings tables with two five-year fixed-rate savings accounts paying 3%.
One is a market-leading tax-free Cash ISA and the other a standard savings account.
The ISA is the only savings account on the market to beat the current rate of inflation of 2.8%.
Inflation-busting accounts
The new accounts from Leeds BS are a welcome change to the savings market where rates have been steadily tumbling since the start of the year.
The cash ISA can be opened with £1 and also has the flexibility of allowing in transfers from older Cash ISAs.
For those savers who don’t want to tie their money away for five years, Leeds BS offers a similar ISA with a lower rate of 2.75%. On this ISA, withdrawals of up to 25% of the money invested are allowed without penalty or loss of interest.
The table below shows how these market-leading accounts compare with the current top five Cash ISAs.
|
Account |
Interest rate (AER) |
Minimum deposit |
Length of fixed rate |
Notes |
|
Leeds BS Five-Year Fixed-Rate ISA |
3% |
£1 |
Five years (fixed until 31st October 2018) |
Transfers and new subscriptions. |
|
Leeds BS Five-Year Fixed-Rate ISA (With Access) |
2.75% |
£1 |
Five years (fixed until 31st October 2018) |
Transfers and new subscriptions, up to 25% can be withdrawn |
|
Skipton BS Online Five-Year Fixed-Rate ISA |
2.50% |
£500 |
Five years (fixed until 11th September 2018) |
Transfers and new subscriptions. |
|
United Trust Bank Five-Year Fixed-Rate Cash ISA |
2.45% |
£5,000 |
Five years |
Transfers and new subscriptions. |
|
Coventry BS Three-Year Fixed-Rate ISA |
2.35% |
£5,760 |
Three years (until 31st May 2016) |
New subscriptions only. |
For a comprehensive review of the top ISAs, read The best Cash ISAs.
Fixed-rate savings accounts
Leeds BS also has two new savings accounts on the market which work in the same way, but without the tax benefits.
The first is the Five-Year Fixed-Rate Bond which pays 3% and can be opened with £100. For those who need their money sooner, there’s the option of a 25% access account, which pays 2.75% for the five years.
These can both be opened with £100. The maximum amount allowed is £1,000,000.
Two accounts come close to the Leeds offering, but they both require a higher opening deposit. Shawbrook Bank has a five-year fixed-rate account at the same rate, but you can only open this with £5,000. Secure Trust Bank pays a slightly higher rate of 3.01% but you’ll need at least £1,000 to open it.
Below I’ve listed the top five-year fixed-rate accounts currently on the market.
|
Account |
Term |
Interest rate (AER) |
Minimum deposit |
Access |
|
Secure Trust Bank Fixed-Rate Bond |
Five years |
3.01% |
£1,000 |
Online |
|
Leeds BS Five-Year Fixed-Rate Bond |
Five years |
3% |
£100 |
Online, post, phone, branch |
|
Shawbrook Bank Five-Year Fixed-Rate Bond |
Five years |
3.00% |
£5,000 |
Online, post |
|
Tesco Bank Fixed-Term Bond |
Five years |
2.95% |
£2,000 |
Online, post |
|
ICICI Bank UK HiSAVE Fixed-Rate Account |
Five years |
2.90% |
£1,000 |
Online, phone |
For a full run-down of the best bonds across a range of terms, check out The best fixed-rate savings bond rates
The savings market
The addition of these four accounts is a positive sign for the savings market. For the past year rates have been steadily declining, largely due to the Government’s Funding for Lending Scheme. This has left savers with very few options when looking for places to put their cash.
In July Skipton launched a seven-year savings account paying a market-leading 3.5%. Although the length of the account makes it pretty unappealing, the fact lenders are launching slightly more competitive rates is a positive sign.
Hopefully other providers will follow suit and things will start to change in the savings market.