Nationwide Fixed Rate ISA and Bond Rates Rise Again: How Do They Stack Up?

Nationwide has raised rates on its fixed rate ISA and fixed rate bond range for the second time this month, with its two-year products now paying 4.55% AER across both account types.

The one-year fixed rate cash ISA moves to 4.5% AER, up from 4.4%, and the two-year to 4.55%, up from 4.5%. On the taxable bond side, the one-year rises from 4.25% to 4.5% and the two-year from 4.3% to 4.55%.

Richard Stocker, Nationwide’s Head of Savings, said: ‘We’re pleased to be increasing rates on our one and two-year Fixed Rate Bonds and Fixed Rate Cash ISAs for the second time this month. These products are ideal for those looking to put money away for a shorter period while benefiting from the certainty of a guaranteed return. Customers can access the same rates whether they choose to save online or in branch, reflecting our commitment to choice and our Branch Promise, backed by the UK’s [largest branch network].’

What the Rate Changes Actually Mean for Savers

The fixed rate ISA range extends beyond the one and two-year products. Nationwide also offers a three-year fixed rate cash ISA at 4.65% AER and a five-year at 4.70% AER. To put those rates in concrete terms, a £1,000 deposit left for the full term produces the following estimated balances:

Source: Nationwide, based on a £1,000 deposit at the stated AER, held to maturity. The early access charges scale with term length, so anyone considering breaking a five-year bond early forfeits the equivalent of 300 days’ interest, which materially erodes the rate advantage over shorter-dated alternatives.

On the bond side, Nationwide’s two-year fixed rate online bond can only be managed online and permits no withdrawals until the term ends. The maximum deposit across fixed rate bonds is £5 million, though the Financial Services Compensation Scheme (FSCS) protects only £120,000 per person per banking licence. Money must be paid into a bond within 14 days of opening it.

How Nationwide’s Fixed Rate ISA Rates Compare to the Market

On headline rate alone, the Nationwide fixed rate ISA range does not lead the market. According to Moneyfactscompare data as of 27 August, AlRayan Bank’s one-year fixed rate cash ISA pays 4.72% and Vida Savings offers a two-year fixed rate cash ISA at 4.77%, both above Nationwide’s equivalent rates. On the bond side, AlRayan Bank’s one-year fixed-term bond pays 4.87% and Investec Save’s two-year fixed rate saver pays 4.95%. NatWest’s two-year fixed term savings account is also competitive at 4.75%, better than Nationwide’s 4.55% two-year bond.

Against the Big Four banks specifically, the picture changes. Nationwide’s one and two-year fixed rate ISAs pay more than equivalent products from NatWest, Barclays, Lloyds and HSBC. On the bond side, Nationwide’s one-year rate also leads the Big Four, even if it trails the broader market.

Rachel Springall, finance expert at Moneyfactscompare, pointed to branch access and accessibility as factors beyond the headline rate. ‘Customers who find digital banking difficult, such as for accessibility reasons, will need to look beyond top rates to find a brand that can cater to their personal needs,’ Springall said. She added: ‘The fixed-rate cash ISAs from Nationwide are accessible for savers with either small or larger pots, with its minimum investment limit set at just £1, plus transfers in from both cash and stocks and shares ISAs are [currently] accepted. Those who do find they need their money sooner can even access the ISA funds early, subject to a set penalty.’

The ISAs are open to UK residents aged 18 or over who have not exhausted their £20,000 annual ISA allowance. From April 2027, under-65s face a £12,000 annual cap specifically on cash ISA contributions, though the overall £20,000 allowance remains unchanged. New Nationwide customers must open the ISA in branch; existing customers can apply online.

The next test for these rates is the Bank of England’s rate path. If the base rate falls further in the autumn, two and three-year fixed terms locked in now begin to look considerably better value in retrospect.