IFISAs have the edge as Cash ISA rates waver
Innovative Finance ISAs (IFISAs) still offer the highest fixed-rate yields out of the UK tax wrappers on the market, as Cash ISA returns start to waver following the latest Bank of England rate cut.
According to Moneyfacts data, the top-yielding easy access Cash ISA account in December was by Atom Bank, paying 4.75 per cent. RCI Bank offered the highest paying notice account with 4.9 per cent offered with 95 days notice.
Al Rayan Bank offered the most competitive one-year fixed rate bond at 4.8 per cent. Castle Trust had the highest two-year fixed rate at 4.64 per cent. And Hodge Bank was offering a market-leading 4.62 per cent on its three-year fix.
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“Top deals across the fixed market have experienced minor fluctuations since the previous inflation announcement, bringing some welcome stability,” said Caitlyn Eastell, spokesperson at Moneyfacts.
“Meanwhile, a handful of new providers have entered the scene, which is positive news in terms of competition and for savers willing to switch to challenger banks, who will have their own pricing strategies.
“Providers may be launching the final push towards meeting their end-of-year targets, so it is possible that further rate adjustments are yet to take place.”
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While Moneyfacts does not track the performance of IFISA rates, the 4thWay Peer-to-Peer And Direct Lending (PADL) Index tracks the returns of approximately half of the UK’s active peer-to-peer lending market by assets under management. All of the constituents have IFISA permissions.
Earlier this year, the PADL Index reported that in the 10 years to August 2024, annualised returns after costs have been 7.36 per cent per annum.
All of the PADL constituents are currently offering IFISA returns of between 6.5 per cent and 10.25 per cent. However, the higher rates are often only available to high net worth individuals rather than retail investors.
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