Savers wanting to spread their tax-free ISA allowance across more than one ISA will be able to benefit from Paragon Bank’s new ISA Wallet, which allows multiple ISAs to be opened within the tax year.
Traditionally, consumers can only open one ISA each tax year, which often means that savers have to choose between locking their money into a higher paying fixed rate ISA or a more flexible easy access ISA. With Paragon Bank’s new ISA Wallet, savers can open several ISAs within the tax year, meaning they can split their £20,000 tax-free allowance between easy access, notice and fixed rate ISAs.
Commenting on the launch of the ISA Wallet, Derek Sprawling, savings director at Paragon, said: “These features are a welcome addition to our cash ISA offering, giving savers even more choice to achieve their savings goals.
“Our Wallet feature allows savers to spread their cash between several Paragon products to suit their needs. For example, a saver may be happy to lock some of their ISA allowance away in a two year fixed rate, put some in a notice account and keep some cash readily at hand through an easy access account. Savers can combine fixed and variable rate ISA products, accessing different rates and different types of product benefits.”
Paragon Bank also enables customers to withdraw and replace money within its easy access ISA without affecting their ISA allowance. Sprawling added: “Combined with the Flexibility feature, which enables a saver to withdraw and replace money from their easy access ISA without it impacting their £20,000 ISA allowance, these features allow savers to make the most of their annual ISA allowance.”
Paragon Bank is able to allow its customers to open multiple ISAs within one tax year as all the ISAs are with one provider. The one ISA rule restricts savers to opening one ISA with one provider, as such multiple ISAs can be opened as long as they are all with the same provider. Along with Paragon Bank, 10 providers allow customers to open multiple ISA within one tax year. These providers are:
• Charter Savings Bank
• Ford Money
• Kent Reliance
• M&S Bank
• Nationwide Building Society
• Newcastle Building Society
• Paragon Bank
• Post Office Money.
For savers looking to deposit their maximum tax-free ISA allowance of £20,000, opening multiple ISAs allows savers more choice on where to put their ISA savings and enables them to both benefit from more attractive fixed term ISA rates, as well as the flexibility easy access ISAs offer. As the below chart shows, average rates across ISAs can vary from 0.84% currently being offered on easy access ISAs to 1.47% on five year fixed rate ISAs.
|Type of ISA||Easy access||Notice||One year fixed||Two year fixed||Five year fixed|
|Average rate February 2020||0.84%||1.13%||1.12%||1.15%||1.47%|
Within the ISA chart, the top rate currently being offered on a five year fixed ISA is 0.4% more than that being offered on an easy access ISA. At the moment, the top five year fixed ISA rate is 1.75% gross being offered by Coventry Building Society on its Fixed Rate ISA (101) 31.05.2025, while the best easy access ISA rate comes from Al Rayan Bank, which offers an expected profit rate of 1.35% gross.
Even within one provider, there is a significant difference between the top rate being offered on a five year fixed ISA and an easy access ISA. For example, Paragon’s best-paying five year fixed ISA offers 1.60% on 5 Year Fixed Rate Cash ISA, while its top easy access rate is 1.21% gross on Easy Access Cash ISA (Issue 7).
Explaining the benefits of opening multiple ISAs within one tax year, Rachel Springall, finance expert at Moneyfacts.co.uk, said: “It’s great to see another provider join the ranks to offer consumers an umbrella of ISAs under their tax-free allowance. Not all savers will be comfortable to tie all their ISA money down for the long-term and some may want quick access to a portion of the pot – providers that therefore allow savers to spread their money across different cash ISAs can be seen as an attractive choice. As an example, someone could put £10,000 into an easy access ISA and £10,000 in a one-year fixed ISA – the latter may then earn a higher rate but, should savers need access to funds, they can dip into the easy access ISA.”
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.