Challenger bank Castle Trust launches best buy one-year fixed savings deal at 3.47% – and a top cash Isa – as rates race higher

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  • Castle Trust annual fix brings 0.07 percentage points more than 2nd best offer
  • The bank also launched an annual fixed rate Isa deal with a payout of 3.15%.
  • This is 0.15 percentage points more than Santander, who is in 2nd place.
  • Both accounts must be opened online with a minimum deposit of £1,000.

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A new lucrative savings deal has been launched, allowing depositors to earn an income of 3.47% when fixed for one year.

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Castle Trust Bank is offering the deal, which is a one-year bond that now tops independent fixed-rate savings tables This is Money, beating those launched last week by BLME and Charter Savings Bank, both paying 3.4 percent. .

Someone who stashed £20,000 in a Castle Trust account could expect to receive £694 in interest after a year.

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Two Choices: Those with large savings may want to consider Castle Trust’s Annual Cash Isa Flat Rate, which pays out 3.15% more than the market.

The fixed rate account can only be opened and managed online with interest paid at the end of the 12-month period.

All deposits are protected by the Financial Services Compensation Scheme, up to £85,000 per person.

Depositors will need to deposit a minimum of £1,000 to get started and can accumulate up to £500,000 in the account.

What is Castle Trust Bank?

Castle Trust was founded in 2012 with the backing of US private equity giant JC Flowers & Co.

He applied for a banking license in 2018 and received full authorization in June 2020. He issued his first savings deals last year and all of his accounts were protected by the FSCS.

The bank, based in Basingstoke, operates without branches. It uses savings deposits to finance lending operations.

It primarily provides mortgages to experienced investors buying to rent and high net worth individuals, as well as business loans.

He says his mortgages and loans often go to those with high-quality assets but unconventional income.

It scores appropriately in terms of online rankings, albeit with few reviews. It scored 3.9 out of 5 on Google reviews and 3.4 out of 5 on Trustpilot.

Account type (min investment) 0% tax 20% tax 40% tax
Castle Trust Bank (£1000+) 3.47 2.78 2.08
BLEM (£1000+) 3.40 2.72 2.04
Charter of Sberbank (£5000+) 3.40 2.72 2.04
close brothers (10,000+) 3.32 2.66 1.99
Oaknorth Bank (£1+) 3.32 2.66 1.99
virgin money (£1+) 3.32 2.66 1.99

Isa New Best Buy Cash Alert

Those with larger savings banks may want to consider Castle Trust Isa’s yearly cash flat rate.

This 3.15 percent is currently the market leader in fixed rate cash savings deals and will allow savers to protect any interest they earn from the tax authorities.

This is because any interest savers earning in excess of the personal savings allowance (£1,000 for base rate taxpayers and £500 for higher rate taxpayers) will be taxed each year.

At an annual flat rate of 3.47%, a base rate taxpayer would need to save nearly £29,000 to exceed their personal allowance, while a higher rate taxpayer would need almost £14,500 to exceed their limit.

Once the interest is taxed at 3.47%, the base rate taxpayer will actually earn 2.78% after taxes, while the higher taxpayer will actually earn 2.08% after taxes.

Sean McCann, graduate financial planner at NFU Mutual, said: “After years of low interest rates, savers finally earning higher returns could be stung by an unwanted tax bill.

“With 3.5% available for flat rate savings, some higher rate taxpayers need less than £15,000 in savings to trigger a tax bill.

“In times of high inflation, every pound counts and no one wants to pay tax on their savings.

“Many people would be better off moving some of their savings to Isa, where the interest they receive is tax-free.

“With inflation running rampant, those who are looking for real growth for their money and are willing to take on more risk with their investments should consider investing in Isa shares, which offer the potential to fight inflation in the long term.”

Account type (min investment) Rate (excluding taxes)
Castle Trust Bank (£1000+) 3.15
santander (£500+) 3.00
Charter of Sberbank (£5000+) 2.65
Leeds B.S. (£1000+) 2.65
Safe Trust (£1000+) 2.65
virgin money (£1+) 2.62

An Isa cash transaction at Castle Trust Bank must be opened and managed online, with a minimum of £1,000 required to open an account. It accepts transfers in.

As with fixed rate bonds, depositors can only withdraw their money without any fees at the end of the 12-month period.

The next best annual deal is offered by Santander and paid at 3%.

Inflation is currently at 9.9 percent and there are currently no accounts that come close to that.

Meanwhile, the base rate stands at 1.75% after a series of hikes since December, which has been a catalyst for savings deals to improve.

However, another rate hike is expected on Thursday, with forecasters expecting it to be 0.5 or 0.75 percentage points, which could lead to more savings deals in the coming months.

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