Best savings rates this week
In this article, Moneywise reviews regular, children's savings, fixed-rate and instant-access accounts with the best savings rates currently on the market.
If you're looking for an account where you can access your money quickly, then a no-notice deal is a good idea.
Just remember, the interest rate on these accounts is variable so it could decrease down the line.
Also, watch out for sneaky terms and conditions - not all instant access accounts offer unlimited withdrawals, so shop carefully.
- Newcastle Building Society Newcastle Big Home Saver (Issue 3) offers savers 2.02% AER, which includes a 1% bonus to regular savers each month they make a deposit without making a withdrawal. The account can be opened with £1 and is managed in branch, by post and online.
- RCI Bank Freedoms Savings Account offers 1.65% AER on a minimum investment of £100. The saver can be accessed online only.
- BM Savings Online Extra (Issue 18) offers 1.6% AER including a 1.1% bonus for the first 12 months. The minimum investment is £1,000 and the saver can be accessed online only.
To stay up to date with latest rates as well as other money saving and money making ideas, sign up to our newsletter.
If you want to make withdrawals but are happy to give your bank or building society notice before you do, then you could get a better rate with a notice account, although recently rates have been disappointing.
- Secure Trust Bank 183 Day Notice (Issue 1) pays 2.07% AER. The account can be opened by post or phone and requires a £1,000 minimum deposit.
- Paragon Bank 120 Day Notice Account (Issue 4) offers savers 1.96% AER. The account can be accessed online only. Minimum deposit is £500.
- Charter Savings Bank 120 Day Notice (Issue 4) pays a rate of 1.95% AER. The account can be opened with £1,000 and the saver can be accessed online only.
Fixed-rate savings accounts are normally aimed at people with a lump sum that they wish to lock away for a pre-agreed period of time.
Interest is fixed so your return is guaranteed. However, bear in mind that withdrawals and further deposits are rarely allowed.
One year/18 months:
- Paragon Bank One-Year Fixed-Rate pays a rate of 2.07% AER on a minimum investment of £1,000. The saver can be accessed only.
- RCI Bank Fixed Term pays a rate of 2.06% AER on a minimum deposit of £1,000. The account can be accessed online only.
- Charter Savings Bank 18-Month Fixed-Rate Bond offers 2.06% AER on a minimum opening balance of £1,000. The account can be managed online only.
- RCI Bank 2 Year Fixed-Term pays a rate of 2.35% AER on minimum investment of £1,000. The account can be accessed online only.
- Paragon Bank 2 Year Fixed-Rate pays a rate of 2.34% AER on a minimum investment of £1,000. The account can be accessed online only.
- Charter Savings Bank Fixed-Rate Bond offers a rate of 2.25% AER on minimum investments of £1,000. Interest is paid on anniversary. The account can be managed online only.
MEDIUM TERM (THREE AND FOUR YEAR TERMS)
- Charter Savings Bank 3 Year Fixed-Rate Bond pays 2.75% AER on balances of £1,000. The account is managed online only. Interest is paid on anniversary.
- My Community Bank 3 Year Fixed-Term Deposit pays 2.75% AER on balances of over £5,000.
- Agri Bank 3 Year Fixed-Rate Savings Account pays 2.7% AER on balances of £10,000. The account is accessible online only. Interest is paid on yearly.
LONG TERM (FIVE YEAR)
- Agri Bank Fixed-Rate Savings Account offers savers 3.30% AER. The account can be accessed online only. It requires an initial investment of £10,000.
- Charter Savings Bank Fixed-Rate Bond pays a rate of 3.05% AER, on minimum investments of £1,000. The account can be accessed online only. Interest is paid on anniversary.
- United Bank UK 5 Year Fixed-Rate Deposit Account pays 3.04% AER. The minimum deposit is £2,000 and accounts can be opened in branch or online.
The current economic backdrop has not only highlighted the importance of saving, but means more people would like to do it little and often.
- First Direct Regular Saver pays 6% AER on deposits between £25 and £300 per month. The rate is fixed for 12 months and is only available to existing customers.
- HSBC Regular Saver Account pays 4% AER on deposits between £25 and £250 a month. The rate is fixed for 12 months, and you must hold a qualifying account with HSBC to apply. No withdrawals can be made and it can be operated via the telephone, online or in branch. HSBC Premier or Advance customers are eligible for an enhanced 6% AER.
- Kent Reliance Regular Savings pays offers a rate of 4% AER on its one-year regular savings account, which is operated in branch. Savers must deposit between £25 and £500 a month. Interest is paid on maturity.
CHILDREN'S SAVINGS ACCOUNTS
- Halifax Kid's Regular Saver offers a market-leading 6% AER 12 month bond. You can deposit between £10 and £100 in the account each month.
- Lloyds TSB Young Saver account bond pays a fixed headline rate of 3% AER on investments of £1. The bond can be managed in branch only.
- Chorley and District BS's Foxley Fund offers a rate of 2% AER on minimum deposits of just £1. The saver can be accessed in branch or by post and interest is paid annually.
A savings account on which the account holder is required to give a period of notice before making a withdrawal or face a penalty, usually a loss of a specific number of days’ interest or pay a fee. Notice periods of 30, 60 or 90 days are common. These accounts usually pay higher than average interest rates and require large initial deposits (£1,000 minimum) so the notice period and penalties are there to discourage withdrawals. Some of these accounts will only allow a certain number of withdrawals a year.
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.