First Direct has increased the rate on its fixed-rate Individual Savings Account (ISA) to 4.40% AER, offering customers a higher return on tax-free savings. The change was announced this week and applies to customers using the account during the current ISA season.
The bank said that customers who deposit the full £20,000 annual ISA allowance would earn £880 in interest after 12 months. Alongside the revised savings rate, eligible customers opening a qualifying current account can also receive a £200 switching incentive before a July deadline.
Higher ISA Rate Offers £880 Return on Full Annual Allowance
According to First Direct, the rate on its fixed-rate ISA has been increased to 4.40% AER in an effort to help customers make greater use of their tax-free savings allowance. The bank stated that a customer depositing the full annual ISA allowance of £20,000 would receive £880 in interest after one year.
The account also allows customers to transfer existing ISA balances into the product. According to the information released by the bank, interest is calculated daily and paid at the end of the fixed term.
According to reports, the revised rate forms part of First Direct’s wider savings offering. The bank linked the change to the current ISA season, during which customers can use their annual tax-free allowance to place money into qualifying savings products.
Colin Harrison, Head of Banking and Propositions at First Direct, said the bank remained committed to helping customers save for the future, including through tax-free savings accounts. He added that customers using the ISA could also access another savings product offered by the bank, its Regular Saver account, which pays 7% interest.
The updated ISA rate represents one of the main changes announced by the bank this week, with the potential return of £880 based specifically on customers depositing the full annual allowance and holding those funds for the 12-month term described by the bank.
£200 Switching Incentive Available to Eligible New Customers
The ISA is available to customers who open a First Direct 1st Account. According to the bank, eligible customers who open the account before 15 July can receive an additional £200 through its switching incentive programme.
The offer applies to new customers transferring their current account to First Direct. Alongside the cash incentive, the bank highlighted several features available through the 1st Account.
According to First Direct, these include access to its 7% Regular Saver account, fee-free overseas card transactions and ATM withdrawals, a £250 interest-free overdraft and customer support available 24 hours a day throughout the year.
Harrison said the combination of the ISA rate, the Regular Saver account and the current account features formed part of the bank’s effort to support customers’ savings goals. He also referred to the customer service offering, stating that support remains available around the clock.
The revised ISA rate and the £200 switching incentive were both confirmed by the bank this week. Customers wishing to access the ISA must hold a 1st Account, while those seeking the additional payment must meet the eligibility requirements and open the account before the stated July deadline.
