TSB raises interest rates on six of its saving products

This Morning: Martin Lewis gives advice on interest rates

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Yesterday the Bank of England announced the biggest individual rise to its base interest rate in more than three decades. The base rate rose by 0.75 percentage points from 2.25 percent to three percent. After this anticipated rise, a number of banks have increased the interest rates offered on their products.

TSB announced this morning that it has increased the rates to its fixed-rate bonds and ISAs.

The one-year bond has increased from 3.5 percent to 4.35 percent, the two-year bond has gone for 3.75 percent to 4.76 percent, and the three-year bond has gone from 3.8 percent to 4.88 percent.

The ISAs which have seen an increase include 18 Month Fixed Rate ISA, the two Year Fixed Rate ISA, and three Year Fixed Rate ISA.

These have increased from three percent, to 3.75 percent, from 3.25 percent to 4.2 percent, and 3.3 percent to 4.3 percent respectively.

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TSB announced that the new rates would be available in branch and online from today.

For the cash ISAs, the interest rate will be fixed and if someone signs up for one today the interest rate will remain the same for the entire ISA lifespan.

Based on a £3,000 deposit on each account, people would gain interest of between £170 and £403 over their ISA term.

Interest on the account is calculated daily and is paid yearly on the anniversary of opening the account and on maturity.

To open a TSB fixed rate ISA, people will need to be 16 years or over and be a UK resident.

People will only need £1 to open one and can deposit a maximum of £20,000 for one year, plus any transfers from other ISAs.

Once opened, people have 30 days to deposit their money.

TSB do allow withdrawals for these ISA accounts however they do come with a penalty charge.

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For the 18-month ISA, this is 135 days worth of interest, for the two-year ISA it is 180 days worth of interest and for the three-year ISA, it is 270 days of interest.

With savings bonds, the rate will remain fixed for the entire lifespan of the bond and people can once again open an account with just £1.

Deposits for bonds however need to be received within 10 working days of opening the account which is a lot less than for the ISAs.

TSB said that an initial deposit of £2,000 into a bond account could build interest of between £87 to £307 across the bond accounts.

People can choose to have their interest paid either monthly or yearly.

The criteria for opening an account are the same as the criteria for opening an ISA and they can be opened online, in branch, or over the phone.

With the Bonds, TSB notes that withdrawals are not allowed once the account is opened. 

Early closure is only available on the death of the owner of the account. 

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