Tesco Bank has further increased the headline interest rate on its Instant Access Cash ISA, in a boost for savers. On Tuesday (March 10), the retail banking brand announced it has raised the rate from 3.97% to 4.02% for new accounts, including a time-limited bonus, as banks compete for customers ahead of the end of the current tax year.
This rate includes a guaranteed fixed bonus rate of 2.97% for the first 12 months, and their standard variable rate (currently 1.05%). After 12 months, savers will receive their standard variable rate (Gross/AER), with interest paid annually.
Tesco, which is run as a partnership between Barclays and Tesco PLC, is among the businesses keen to attract new customers.
Caitlyn Eastell, a personal finance analyst at Moneyfactscompare.co.uk, previously explained that Isa season is “coming into full swing” as April 6 approaches. “Typically, this is when providers will compete most fiercely to make their deals enticing to new customers,” she told PA.
“This year is gearing up to be particularly competitive because the 2026-27 tax year marks the final year for those under 65 to utilise their full £20,000 cash Isa limit,” she added.
Cash ISAs allow you to earn interest without paying income tax, with savers able to deposit up to £20,000 across ISA products each tax year.
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Tesco Bank pointed to research conducted in January by Opinium among 2,200 UK Adults, 1,304 of whom hold at least one Cash ISA, suggesting that before the cash limit for ISAs reduces in April next year, 41% of cash ISA savers are on the lookout for market-leading rates to boost their savings over the next year.
Meanwhile, 80% of cash ISA holders hadn’t maximised their full ISA allowance for the current financial year, the firm said.
Chris Henderson, Save and Pay Director at Tesco Bank, said: “Cash ISAs are a savvy way to build up your savings over time, while benefitting from the tax advantages they offer.
“At a time when we know people will be shopping around in the next few weeks to boost their savings before the start of April, we’re pleased to offer both new and existing customers an increased rate on our Instant Access Cash ISA.”