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The changes to interest rates offered by Paragon Bank was announced today, and affects all of the fixed rate products offered by the provider. The challenger bank added that the new rates are “significantly” above industry averages.
The decision, branded a “positive move for savers” by the bank, will take effect from Friday August 21.
The bank’s range of fixed term products may be opened online, over the phone, or by post.
They are available to new and existing customers.
Derek Sprawling, Savings Director at Paragon Bank, said: “We are committed to offering competitive rates to savers and we are pleased to be in a position to increase interest rates across our fixed rate products.
“These new interest rates far exceed the industry average and will offer more choice to people who are looking to guarantee their return for a period of time.
“Having the ability to apply online, by telephone or by post means these rates are accessible to all.
“Our 28-day rate guarantee means that any customers part way through the application process already, or with an imminent maturity with us, will also benefit from our new rates automatically.”
So, what products are changing from this date?
The Fixed Rate Bonds affected by the rate increase are the:
1 Year account – previous interest rate of 0.75 percent AER, increasing to 1.20 percent AER)
2 Year account (previous interest rate of 0.90 percent AER, increasing to 1.30 percent AER)
3 Year account (previous interest rate of 0.95 percent AER, increasing to 1.35 percent AER)
5 Year account (previous interest rate of 1.10 percent AER, increasing to 1.40 percent AER)
The Fixed Rate ISA products include:
1 Year ISA (previous interest rate of 0.60 percent AER, increasing to 0.85 percent AER)
2 Year ISA (previous interest rate of 0.70 percent AER, increasing to 0.90 percent AER)
3 Year ISA (previous interest rate of 0.75 percent AER, increasing to 0.95 percent AER)
5 Year ISA (previous interest rate of 0.90 percent AER, increasing to 1.10 percent AER)
Today’s best ISA rate for a one-year fixed rate is 0.85 percent AER, while this rises to 0.92 percent AER for a two year fixed rate ISA, Moneyfacts states.
Commenting on the news, Rachel Springall, Finance Expert at Moneyfacts.co.uk, told Express.co.uk: “It’s encouraging to see some much-needed competition enter the savings market and this has meant short-term fixed bonds have improved in recent weeks.
“However, as we have seen before, lucrative offers can be oversubscribed very quickly so savers would be wise to act soon to take advantage.
“As it stands the top one-year fixed rate bond is on offer from OakNorth Bank paying 1.21 percent and other competitive rates in this sector are offered by challenger banks.
“Whilst savers may be unfamiliar with the challenger banks, so long as they are protected by the Financial Services Compensation Scheme (FSCS), there is little reason for them to be overlooked.
“Those savers looking to take advantage of their ISA allowance may also find the wallet feature enticing as savers can spread their investment between easy access and fixed, handy for those who may need to dip in the their savings in the months to come.”
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