Paragon Bank tops ISA charts after rates rise

Paragon Bank has increased the rates on its fixed ISAs today, resulting in several of the ISAs topping our fixed rate ISA comparison charts for their terms.

The rate rises today mean that Paragon Bank now tops the one, two and three year fixed ISA charts. Meanwhile, its new five year rate is highly competitive in the five year fixed ISA chart. The new Paragon Bank ISA rates are:

• 1 Year Fixed Rate ISA – 0.75% AER
• 2 Year Fixed Rate ISA – 1.01% AER
• 3 Year Fixed Rate ISA – 1.11% AER
• 5 Year Fixed Rate ISA – 1.25% AER.

There are versions of all these ISAs that pay interest on anniversary or monthly, although a slightly lower gross rate is paid on the three and five year monthly options. All the ISAs require a £500 minimum deposit to open and accept transfers in. Earlier access is permitted but subject to 90 days’ loss of interest on the one year option, 180 days’ loss of interest on the two year version, 270 days’ loss of interest on the three year option and 365 days’ loss of interest on the five year version. All the ISAs can be opened and managed online or by post.

Today’s rate increases by Paragon Bank sees it top many of the ISA charts, but overall the most competitive rate remains from United Trust Bank, which pays 1.40% AER on its ISA 7 Year Bond. This ISA, however, requires savers to lock their money into the account for seven years, which many savers may be reluctant to do, especially as rates are still comparatively low and inflation is expected to continue rising.

As a result, savers looking to lock into a fixed rate ISA may prefer a short-term option that sees their savings locked away for just one year. Paragon Bank now tops the one year fixed ISA chart with its new rate, however OakNorth Bank and Shawbrook Bank both offer highly competitive rates in this chart as well, with both banks paying 0.74% AER on their one year fixed ISAs.

Savers who would rather be able to access their savings can consider an easy access ISA instead. This type of ISA usually allows savers to make further deposits to their ISA whenever they choose and allow instant access to funds, although some may have restrictions on when or how many withdrawals can be made. The top rate in the easy access ISA chart currently comes from Cynergy Bank, which pays 0.65% gross on its Online ISA (Issue 15).