Nationwide fires its next salvo in the ISA wars

With Santander’s recent pre-emptive strike in the ISA wars, grabbing the top spot with its 3.3 per cent interest rate offering, Nationwide has fired back through its subsidiary, Cheshire Building Society.

Cheshire BS will increase the rate on its own ISA savings product in order to eclipse Santander by 0.05 percentage points, pushing the Spanish banking giant to the side with a 3.35 per cent offering.  Moreover, the 18 month ISA offering from the building society also pips Santander’s product, again edging out its 4 per cent offering by 0.05 percentage points.

Unfortunately for savers, neither of Cheshire’s deals permit transfers in, which could work to keep Santander’s deals on top even in spite of the building society’s greater rate of return.  The Spanish bank does indeed allow transfers from previous years’ accounts, one of the bank’s spokespersons recently pointed out, thus leading to his belief that it offers savers a superior proposition.

Financial services providers are well aware that a veritable tidal wave of savers are on the hunt for a lucrative cash ISA deal as the 5 April deadline to invest their cash allowance of £5,340 looms ever closer.  Last March saw £1.3 billion hastily deposited into cash ISAs, and industry experts predict a similar figure to materialise in 2012.

Nationwide’s Cheshire brand and Santander have been the stand-outs this year in jockeying for the top position, each of them trading blows by raising rates ever higher.  Santander started the pub brawl Monday by launching three best buy deals in the instant access, one-year, and two-year ISA tables, spurring Nationwide to counterattack the following day with its own ratcheted-up rates of return.

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