Top savings rates continue to fall
Banks continue to pare rates on offer to new savers. This week Kent Reliance will cut the 1.45% before tax (1.16% after) it pays on its Easy Access account to 1.35% (1.08%). The fall follows hot on the heels of Virgin Money’s cut to 1.25% (1%) on its Access Saver account.
The top easy access deal that you can run on the internet pays 1.36% (1.09%) from National Counties Building Society. On branch-based accounts Britannia, part of Co-op Bank pays 1.5% (1.2%) but you are limited to making a maximum four withdrawals a year.
On fixed rate bonds the top one-year deal comes from Post Office at 1.8% (1.44%) followed by National Counties at 1.76% (1.41%). Yorkshire Building Society pays a top 2% (1.5%) for 18 months while with Post Office your money earns 2.25% (1.8%).
On cash Isas the best easy-access rate comes from Britannia at 1.75% tax-free and you can transfer your existing cash Isas into this account. The top one-year fixed rate deal through branches and over the telephone comes from Britannia at 1.85%. You can earn 2% fixed for 18 months with Yorkshire Building Society or 2.1% fixed for two years with National Counties.
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.