Claiming that their new offering will appeal to savers who are tired of having to deal with bonus rates that evaporate after 12 months, one of the UK’s newest personal and business bank account providers has launched their inaugural ISA.
Metro Bank’s new Instant Access Cash ISA carries a 2.35 per cent interest rate, along with the guarantee that any increases to the base rate will also be tracked up to 2013. The bank states that this will leave customers not feeling as if they had been cheated as their new offering has no bonus rate to drop off in a year.
Some industry experts have lauded the approach Metro Bank has taken with its rates. This year’s top five ISAs that offer instant access to a saver’s cash all include a bonus rate, and once these rates expire savers are left with sometimes miserable rates.
Two examples of such abysmal rate reductions in the wake of a bonus rate drop-off include both Halifax and Santander’s offerings. While the first 12 months of each ISA carry a 3 per cent and 3.3 per cent rate respectively, both drop to a measly 0.5 per cent after one short year. This can lead savers that neglect to move their cash in a year’s time having their cash locked in to a savings product with a terrible rate – a poor reward for bank loyalty.
The average rate carried on an easy access ISA is 1.79 per cent. However the average bonus on an account of that nature is currently 1.34 per cent, which makes up the majority of the rate.
The new stripped-down ISA from Metro is exactly what the upstart bank is all about, stated bank spokesman Paul Marriott-Clarke. Stating that the offering will do what it says on the tin, customers are not going to be blindsided by the sudden and precipitous drop of an interest rate.
The Metro Bank spokesman stated that the new savings product is part and parcel of the bank’s efforts to eliminate bank rules that are archaic and illogical. The practice of boosting headline rates by ratcheting on a teasing bonus rate is one such cultural phenomenon the bank is looking to oust, Mr Marriot-Clarke added.