State Bank of India leads the ISA charge

Want to earn more interest on your cash ISA? The State Bank of India (SBI) has stormed the market with two new fixed rate accounts that pay leading rates of interest.

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Over five years, you can earn 2.5% AER, while over 1,000 days (which, at 33 months, is almost 3 years) you can earn 2.3% AER. As the accounts are ISAs, interest is paid free of tax.

Both online accounts require a £15,000 minimum deposit, but if you want to open the ISA in-branch or through the post, you'll only need £5,000 to invest. The rates paid and the other conditions are the same.
 
Let’s take a closer look…

What’s the deal?

The State Bank of India’s two new accounts, which both accept transfers in from other ISA providers, are:

  • 1,000 Days Cash ISA Fixed Deposit at 2.3%
  • 5-year Cash ISA Fixed Deposit at 2.5%

As promised in the names, you will need to leave your cash locked up for 1,000 days and five years respectively.

You will need a significant sum of £15,000 to open the account online, although the in-branch and postal versions of the ISA require a minimum investment of £5,000.

You will need to open a current or savings account with SBI to qualify (more on this further down the article).

Who are they good for?

These accounts are a great option for you if you:

  • Used your full ISA allowance for this year: You will need £15,000 if you want to open and operate this account online which is the maximum tax-free allowance for the current tax year. Next tax year, starting from April 6, this allowance rises to £15,240.
  • Want the very best cash online ISA rate: At 2.3% and 2.5%, these new accounts beat their competition (at the time of writing).
  • Have ISA balances from previous years: You can transfer cash from other ISA providers to all of the SBI accounts.
  • Won't need to 'dip in' to your account for least two-and-three-quarter years: No partial withdrawals are allowed within the 1,000-day or 5-year terms. You will be able to access ALL of your funds before the end of the respective terms if you give 30 days' notice, but interest will be paid at 1% LESS than the applicable rate.

Even though State Bank of India is not a mainstream high street banking brand, it is regulated by the Financial Conduct Authority (FCA).

It is also covered by the Financial Service Compensation Scheme (FSCS) which protects the first £85,000 should the bank fail.

Any catches?

You will need a separate savings or current account with SBI to benefit from these ISAs. So what’s the deal on these?

  • SBI’s Online Instant Access Savings Account and Instant Access Savings Account can both be opened with £500 and pay a competitive 1.25% (as long as you maintain a balance of at least £500).
  • Its Current Account pays no interest, but offers online banking and free cash withdrawals in the UK and India – as well as free cash transfers to India (free transfers are also available to savings account customers).

What’s the verdict?

“You will need at least £15,000 if you want to open this ISA online..." 

These new SBI cash ISAs could be an attractive option for savers frustrated with low returns, as another tax year draws to a close.

Take the 1,000-day account. It’s rather unusual term lasts for about two-and-three-quarter years, putting it closest in line with fixed-rate accounts lasting for three years.

The best account on the market over this term is from Yorkshire Building Society which pays a tax-free 2% (although this can be opened with a much-smaller £100).

Aldermore Bank pays the same 2% rate over three years with its fixed rate ISA and you’ll need £1,000 to open that one.

Over five years, the difference between the SBI rate of 2.5% and the previous market leader – Halifax’s five-year ISA Saver Fixed at 2% – is even more marked. Although, again you will need a smaller £500 to open the Halifax account.

But SBI’s minimum £15,000 investment for the online account may not necessarily be a barrier – especially if you have existing funds to transfer.

And opening SBI’s savings account may be no great hardship either. At a variable rate of 1.25% it can only be beaten in the instant access arena by over-50s specialist Saga at 1.35%.

 

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

Over five years, you can earn 2.5% AER, while over 1,000 days (which, at 33 months, is almost 3 years) you can earn 2.3% AER. As the accounts are ISAs, interest is paid free of tax.

Both online accounts require a £15,000 minimum deposit, but if you want to open the ISA in-branch or through the post, you'll only need £5,000 to invest. The rates paid and the other conditions are the same.
 
Let’s take a closer look…

What’s the deal?

The State Bank of India’s two new accounts, which both accept transfers in from other ISA providers, are:

As promised in the names, you will need to leave your cash locked up for 1,000 days and five years respectively.

You will need a significant sum of £15,000 to open the account online, although the in-branch and postal versions of the ISA require a minimum investment of £5,000.

You will need to open a current or savings account with SBI to qualify (more on this further down the article).

Who are they good for?

These accounts are a great option for you if you…

  • ...Used your full ISA allowance for this year: You will need £15,000 if you want to open and operate this account online which is the maximum tax-free allowance for the current tax year. Next tax year, starting from April 6, this allowance rises to £15,240. 
  • ...want the very best cash online ISA rate: At 2.3% and 2.5%, these new accounts beat their competition (at the time of writing).
  • ...have ISA balances from previous years: You can transfer cash from other ISA providers to all of the SBI accounts.
  • ...won't need to 'dip in' to your account for least two-and-three-quarter years: No partial withdrawals are allowed within the 1,000-day or 5-year terms. You will be able to access ALL of your funds before the end of the respective terms if you give 30 days' notice, but interest will be paid at 1% LESS than the applicable rate.

Even though State Bank of India is not a mainstream high street banking brand, it is regulated by the Financial Conduct Authority (FCA).

It is also covered by the Financial Service Compensation Scheme (FSCS) which protects the first £85,000 should the bank fail.

Any catches?

You will need a separate savings or current account with SBI to benefit from these ISAs. So what’s the deal on these?

  • SBI’s Online Instant Access Savings Account and Instant Access Savings Account can both be opened with £500 and pay a competitive 1.25% (as long as you maintain a balance of at least £500).
  • Its Current Account pays no interest, but offers online banking and free cash withdrawals in the UK and India – as well as free cash transfers to India (free transfers are also available to savings account customers).

What’s the verdict?

“You will need at least £15,000 if you want to open this ISA online..."

These new SBI cash ISAs could be an attractive option for savers frustrated with low returns, as another tax year draws to a close.

Take the 1,000-day account. It’s rather unusual term lasts for about two-and-three-quarter years, putting it closest in line with fixed-rate accounts lasting for three years.

The best account on the market over this term is from Yorkshire Building Society which pays a tax-free 2% (although this can be opened with a much-smaller £100).

Aldermore Bank pays the same 2% rate over three years with its fixed rate ISA and you’ll need £1,000 to open that one.

Over five years, the difference between the SBI rate of 2.5% and the previous market leader – Halifax’s five-year ISA Saver Fixed at 2% – is even more marked. Although, again you will need a smaller £500 to open the Halifax account.

But SBI’s minimum £15,000 investment for the online account may not necessarily be a barrier – especially if you have existing funds to transfer.

And opening SBI’s savings account may be no great hardship either. At a variable rate of 1.25% it can only be beaten in the instant access arena by over-50s specialist Saga at 1.35%.

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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