Banks starting to close top-paying savings accounts
Top-paying accounts are disappearing fast, as banks and building societies close their top deals.
BM Savings has closed both its easy access internet-based account Online Saver Reward 4 and its top-paying one-year fixed-rate bond to new savers. The Coventry Building Society top two-year deal has also been withdrawn.
The best easy-access account is the Coventry Building Society Online Saver Issue 5, at 1.6% before tax (1.28% after tax). But you are limited to four free withdrawals a year.
The top deal with no restrictions is Sainsbury's Bank eSaver Special at 1.55% (1.24%).
On fixed-rate deals, the top one-year bond is now 1.91% (1.53%) from Virgin Money. On two-year deals you can earn 2.3% (1.84%) with Shawbrook Bank, while both Tesco and GE Capital pay 2.05% (1.64%) for 18 months. Shawbrook pays 2.65% (2.12%) fixed for three years.
Leeds Building Society has launched a bond paying 4% (3.2%), with interest paid monthly. But to earn this you have to tie your money up for 10 years.
On tax-free cash Isas the best one-year fixed rate is 1.91% from Virgin Money, with both Post Office and Bath Building Society paying 1.90%. Britannia pays 2.05% for two years, while Halifax, Post Office, Principality Building Society and Aldermore Bank all pay 2%.
For three years plus you can earn 2.75% with Coventry Building Society, with your money tied up until May 2017. But you cannot transfer your existing cash Isas into this account. The best three-year deals that accept transfers come from Aldermore and Halifax at 2.25%.
On easy-access cash Isas the Post Office Premier Isa pays 1.8%, including a 0.9 percentage point bonus for the first 18 months. The best deal where the rate is not boosted with an initial bonus is 1.75%, available from Virgin Money, Britannia and National Savings & Investments.
You cannot transfer your cash Isas with other providers to the National Savings account.
This article was written for our sister website Money Observer
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.
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.