More cuts to cash Isa and savings rates adds to consumer woe
Savers have to brace themselves for more bad news as banks and building societies close their top easy-access deals to new savers.
In a flurry of cuts last week, top deals on both cash Isas and taxable accounts disappeared.
Post Office closed its Premier Cash Isa to new savers which paid a top 1.8% while Coventry Building Society shut the doors on its Online Saver account. It paid a top 1.6% before tax (1.28% after tax). And in a further blow to savers Virgin Money cut the rate to new savers on both its Cash Isa to 1.61% and Easy Saver account to 1.41% (1.13%)
The top easy-access cash Isa comes from Britannia, part of Co-op Bank, at 1.75%, while on taxable deals the best rate is 1.5% (1.2%) with Tesco Bank Internet Saver, AA Internet Extra Issue 13 and State Bank of India Instant Access Savings Account.
On fixed rate taxable deals the best one-year rate comes from State Bank of India at 1.85% (1.48%) followed by Britannia at 1.84% (1.47%)
On two years you can earn 2.25% (1.8%) with Post Office or 2.1% (1.68%) with National Counties BS.
On cash Isas, Britannia pays 1.85% fixed for one year and Post Office 2.25% for two years.
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.