Nationwide boosts Champion Isa to 2.84%

By DAN HYDE
Updated:

 

Nationwide's Champion Isa rose to 2.84% this month, pushing it to second in the best buy tables and pointing towards improved tax-free rates across the High Street.

A piggy bank sitting on a carpet of coins

Isa deal: Nationwide aggregates the top five High Street rates

The popular 'Champion Isa' tracks the five highest-paying branch-based cash Isas on the High Street and is adjusted on the first of every month.

On 1 December, Nationwide announced that its rate will stand at 2.84% until the New Year, up from 2.78% in November.

This year the Champion Isa has ranged from 2.8% in April and May to 2.34% in August, as the average at other providers has fluctuated.

December's increase comes after a similar move in October and it holding firm in November - good signs for savers.

Nationwide's Champion Isa now ranks second in our independently compiled best savings rates tables.

However, the bigger picture isn't so rosy. The Champion rate includes a sizeable bonus of 1.35%, payable on June 2011. So the average instant access Isa rate on the highest paying High Street accounts (on which the Champion Isa is based) is actually just 1.49% - well below UK inflation.

Prices across the economy are still rising ahead of the Bank of England's target. In November, the consumer prices index stood at 3.1%, compared with the 2% target level.

Unfortunately, no easy access Isa rate matches up. So any money stored at the current Champion Isa rate is, technically speaking, losing value relative to the economy.

More tempting deals are available online than at walk-in High Street branches, too. Santander offers the best instant access Isa rate at 2.85%, while Principality's e-Isa pays 2.8% and Halifax's Isa Direct Reward pays 2.8%.

On a one-year basis, Northern Rock offers 3.05% - a best buy.

A serious drawback for Nationwide savers is that just one free withdrawal is permitted each tax year. Further access is subject to 60 days notice or 60 days loss of interest.

Savers yet to use up this year's £5,100 Isa allowance must start by depositing at least £1,000 as a minimum opening balance in the Champion Isa.

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