Harpenden Building Society has launched a new easy access ISA account paying a market-leading interest rate of 5.1 percent.

Savings interest rates have dipped in recent months after three consecutive Bank of England Base Rate freezes, but easy access savings accounts and ISAs continue to offer some of the highest returns on the market.

Easy access accounts are a more flexible investment option, as these allow savers to make payments and withdrawals with minimal restrictions and with small opening deposit requirements.

Cash ISAs are a popular savings option, as these accounts enable people’s money to grow without having to pay tax on the interest above the Personal Savings Allowance (PSA).

Harpenden Building Society’s Online ISA (Issue One) can be opened with just £1 and interest is applied annually on April 5.

Savers must be at least 16 years old and a UK resident and hold a valid National Insurance number.

Transfers in and withdrawals are permitted. However, if a withdrawal is made, the amount taken out cannot be replaced and will still count towards the person’s annual ISA allowance.

Harpenden Building Society was formed in Hertfordshire in 1953 and all deposits up to £85,000 are protected by the Financial Services Compensation Scheme (FSCS).

But while Harpenden Building Society is offering an attractive deal, the competition doesn’t fall too far behind.

Moneybox is offering an Annual Equivalent Rate (AER) of 5.09 percent. This includes a 0.94 percent bonus rate for the first 12 months.

Savers need £500 to invest and interest is paid on the anniversary of the account opening.

A lower interest rate of 0.75 percent AER (variable) applies whenever the account balance is less than £500. It will also apply for the rest of a 12-month period if a person makes more than three withdrawals.

The number of withdrawals savers can make without impacting their rate will reset each year on the date they opened the Cash ISA.

Offering more flexibility, Zopa’s Smart ISA falls just behind with an AER of 5.08 percent and interest is paid monthly.

The rate includes a 0.5 percent bonus until April 6, 2025, and savers need just £1 to invest. Withdrawals can be made at any time.

Commenting on the market, Rachel Springall, finance expert at Moneyfacts, said: “Savers who prefer to keep their cash closer to hand will find easy access variable rates are much higher now than they were a year ago, but returns have dipped slightly month-on-month.

“Savings providers will no doubt be aware of the ongoing murmurings of the Bank of England Base Rate coming down in 2024, but even if this doesn’t occur for the next few months, variable rates can still change.

“Providers will be looking closely both at their interest margins, the swap market, and their own position in the top rate tables against their peers. Swift movement can take place if they are sitting way ahead of their competition or if they are drawing in too much in deposits.”

Ms Springall added: “As we start a new year, it is the perfect time for savers to review their existing pots and switch if they are not being paid a good return for their loyalty.

“A new ISA season should also bring a flurry of activity from providers and, due to the interest rate rises of 2023 and upcoming ISA reforms, they may be in more demand from savers who are close to breaching their Personal Savings Allowance (PSA).

“Savers will need to consider all the different account options available to them to suit their short or long-term goals and move swiftly to take advantage of the top rates.”