Nationwide Building Society now pays up to 4.55% on its two-year fixed-rate cash ISA, and the same rate on its two-year taxable bond. MoneyWeek reported the move on 27 August. It was the second increase on those products in a single month.
The mechanics here are a series of small steps. The one-year fixed-rate cash ISA rose to 4.5% AER from 4.4%, and the two-year ISA to 4.55% from 4.5%. The one-year bond climbed from 4.25% to 4.5%, and the two-year bond from 4.3% to 4.55%.
The catch is the comparison
Look at the market and the headline loses some shine. According to Moneyfactscompare data as of 27 August, AlRayan Bank’s one-year fixed cash ISA pays 4.72% and Vida Savings pays 4.77% on a two-year ISA. For bonds, AlRayan offers 4.87% for one year and Investec Save pays 4.95% for two. NatWest, one of the big four, has a two-year fixed savings account at 4.75%, ahead of Nationwide’s two-year bond.
Nationwide’s case rests on its name. Both ISAs pay more than the big four banks of NatWest, Barclays, Lloyds and HSBC offer on comparable accounts, and its one-year bond is the best of that group, although it trails the wider market. Rachel Springall of Moneyfactscompare also noted that branches give in-person support, which many digital banks lack. “Customers who find digital banking difficult, such as for accessibility reasons, will need to look beyond top rates,” she said.
The conditions
ISA applicants must be 18 or over, UK residents, and still have room in the 20,000 pound annual allowance. New customers must apply in a branch, and the account has to be funded at the time of application, through an ISA transfer or another Nationwide account. The minimum is 1 pound. Early withdrawals are allowed for a charge. At the end of the term, the money drops into an instant access cash ISA at a lower rate.
The bonds are open to anyone 16 or over with an email address, in branch or online. Money must go in within 14 days and stays locked until the term ends, after which it moves to a lower-paying instant access account. Savers can put in up to 5 million pounds, but the Financial Services Compensation Scheme covers only 120,000 pounds per person, per banking licence.
One change is coming. From April 2027, people under 65 will be limited to 12,000 pounds a year in cash ISA contributions, although the overall 20,000 pound allowance stays.
