A NEW market-leading rate has been launched offering savers 2.15% on their cash.
The interest rate comes from Teachers Building Society (TBS) and is on its fixed rate cash ISA account.
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An ISA (Individual Savings Account) is a type of savings account where the interest you earn is tax-free.
There are different types of ISA but a cash account offers interest on the money you save. A fixed rate ISA is a type of cash Isa.
A fixed rate means that you get a set interest rate for a specific period, but you usually won’t be able to access your cash in this time like with an easy access saving account.
TBS is now offering the 2.15% rate if you put away your cash for 18 months.
That’s the top rate for an 18 month fixed rate cash ISA on the market right now, according to Moneyfacts.
It’s slightly less than Paragon Bank – which offers an 18 month ISA paying 2.25% – but that one is only available for existing customers.
Anyone can apply online to open the TBS account as it’s available to new customers.
You can save with the building society whatever your job is – it’s not just for teachers despite the name.
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You’ll need to deposit at least £1,000 when you open an account and can save up to £250,000.
The building society says the estimated balance at the end of the fixed rate period based on a £1,000 deposit would be £1,032.45.
That means you would make £32.45 interest after 18 months of having the account, but this would be higher the more you save.
That’s also assuming you make that deposit on the first day of using the account, and no further deposits or withdrawals are made throughout the fixed term.
With this account it’s worth remembering you won’t be able to withdraw the cash during the period of the fix – so 18 months.
If you might need to access cash during this time then a different type of account might be better, like an easy access saving account.
It’s also worth checking the full terms of the account so it suits your needs.
David Leek, commercial director at Teachers Building Society, said: “Our new 18 month fixed rate cash ISA provides a tax-free, top of market interest rate for savers looking for a secure home for their money before the end of the current tax-year.
“Whilst borrowers have benefited from a period of low interest rates, savers have had a harder time so its little surprise that our fixed rate cash ISAs have proved to be very popular in recent weeks.”
How to get the best savings rate
The best saving rate depends on the type of account you choose, so it’s worth comparing them first.
You may find a better rate on the same type of account – a cash ISA – if you fix for longer.
For instance Leeds Building Society offers a better rate of 2.55% if you fix for 28 months.
Meanwhile other types of account might offer a better rate.
Nationwide‘s FlexDirect current account for instance offers a rate of 5% on balances – but only up to £1,500.
Yorkshire Building Society (YBS) has launched a new one year regular saver with an interest rate of 5%.
This is the highest interest rate on the market for a regular saver, but you will need to be an existing customer and can save a maximum of £500 a month.
Interest rates on savings accounts have increased recently as the Bank of England has increased the base rate.
High street banks pass this on to savers, though not always straight away.
Unfortunately no accounts beat inflation which has soared to 9.4% and could reach as high as 11%.
That means that your savings could be worth less over time, but getting the best rate you can means you can lessen the impact Martin Lewis advises.
As well as the rate it’s worth considering what you are saving for.
For example if you want quick access to emergency savings, then you don’t want to tie it up for a fixed period.
But if you’re saving for a home deposit or something longer term then a fix may be worth it.
Also remember the interest won’t be tax free if you save outside an ISA, though most people get a Personal Savings Allowance which means they can already earn a certain amount of interest tax-free.
Basic rate taxpayers can earn £1,000 in interest a year tax-free – in whatever account they’re saving in.
While if you’re a higher-rate taxpayer you earn up to £500 tax-free.
