Today's best saving rates
THIS IS AN OLD VERSION OF THE MONEYWISE SAVINGS ACCOUNT ROUND-UP. FOR THE UP-TO-DATE VERSION PLEASE CLICK HERE.
The fixed rate savings market has got a little more competitive following Icesave's launch of a one-year fixed account paying 7.01% AER.
The account requires a minimum deposit of £1,000 but if you have less to save then Birmingham Midshires pays 6.81% AER for one-year on deposits from £1. It also pays 6.87% AER with its six-month account.
Elsewhere, Cahoot offers an account fixed at 6.88% AER until 30 October 2008 on deposits from £1, or Heritable Bank has a one-year account paying 6.8% AER on deposits of £1,000.
|Fixed rate accounts||AER||Term||Deposit|
Source: Moneyfacts 02/05/08
|Birmingham Midshires (online)||6.87%||Six-months||£1|
|Birmingham Midshires (online)||6.81%||One-year||£1|
Opting for a fixed rate account at the moment could be a good move if interest rates are cut on 8 May.
But if you haven't yet utilised your ISA allowance for 2008/09 then this should be the first place for your savings.
The first thing to decide is whether you want to fix your interest rate or opt for more flexibility with a variable rate. The Bank of England chopped interest rates in April and many economists predict it may do the same in May.
So, if you are happy to lock your money away for a set period of time then the security of a fixed rate ISA might be for you.
If you've got the full £3,600 to deposit then Principality Building Society offers a competitive 6.6% AER six-month account. This account accepts transfers from previous ISAs.
Or Bradford & Bingley pays 6.25% AER on its one-year account, and Julian Hodge Bank pays 6.15% AER for one-year.
However, if you are prepared to put your money away for four years, then Halifax pays 6.2% on deposits from £500.
For people with smaller amounts to save, Nationwide and Birmingham Midshires both have accounts paying 6.15% for one year on deposits of £1.
If you would rather plump for a variable rate ISA, then the best rate on the market is from National Counties. It pays 6.26% AER on deposits from £1.
Barclays has re-launched its Tax Haven ISA paying 6.25% AER on deposits from £1. Bear in mind that this rate includes 1% bonus rate for 12 months.
Finally, Market Harborough pays 6.10% AER on deposits of £1, which includes 0.6% bonus until 31 April 2009.
Icesave also offers an account priced at 6.10% on deposits of £1,000 while Egg pays 6.05% on deposits of £1.
Finally, Scarborough pays 6.05% AER on deposits of £1,000 with its 30-day notice ISA.
|ISA Accounts||AER||Fixed or variable||Notice or term||Deposit||Introductory bonus|
|Source: Moneyfacts 02/05/08|
|Principality BS||6.6%||Fixed||Six-months term||£3,600||n/a|
|Barclays Bank||6.25%||Variable||None||£1||1% for 12 months|
|Bradford & Bingley||6.25%||Fixed||One-year term||£3,600||n/a|
Instant access accounts
If you want instant access and to manage your money online, then Birmingham Midshires' e-saver account pays 6.5% AER on deposits of £1 or Kaupthing Edge pays 6.5% AER on deposits of £1,000.
FirstSave offers an Easy Access online account paying 6.26% on deposits of £100 while Bradford & Bingley pays 6.15% on deposits from £1.
Or you could opt for ICICI Bank’s HISAVE Saving account which pays 6.17% on deposits from £1.
However, if you are considering an instant access account be aware than many come with a sting in the tail - for example, you might lose a month of interest if you access your cash or face your account being closed down altogether if you make too many withdrawals. Find out which instant access accounts come with strings attached in our review of this type of savings product.
|Source: Moneyfacts 02/05/08|
|ICICI Bank UK||6.17%||None||£1|
|Bradford & Bingley||6.15%||None||£1|
Best of the rest
If you are committed to making regular savings then Abbey has a fixed account paying 7.23% AER for monthly deposits of between £20 - £250.
If you are over 50 then you could consider a product from Coventry Building Society. It has extended its 60-plus notice account to the over 50s. The account has an AER of 6.2%, which includes a 0.60% bonus for the first year from account opening.
Finally, if you’re a parent looking to set up a savings account for your children, then Halifax’s one-year Children’s Saver bond continues to outshine its competitors, paying 10% AER on deposits from £10.
If you have less to save then Halifax's Save4it instant access account pays 5.55% AER on deposits of £1 and Yorkshire Building Society offers an instant access account paying 5.99% on deposits of £100.
To search and apply for other great saving rates click here.
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.