Top 10 savings account rates offer little solace to savers
Nationwide has launched its Instant Isa Saver paying a tax-free 1.5%.
It is a simple account with a competitive rate, no initial bonus and no withdrawal restrictions and you can transfer your existing cash Isas into the account.
The rate puts it among the top 10 easy-access deals. It is widely available through the society's 700 high street branches or on the internet.
The top easy-access cash Isa comes from Britannia at 1.75%, but you are limited to two withdrawals a year. Nationwide and its offshoots Derbyshire, Cheshire and Dunfermline pay 1.6% on Easy Isa 5, but you cannot transfer your existing cash Isas into this account.
On fixed rate deals Britannia pays 1.85% fixed until January 2015 or 2.05% fixed until January 2016. National Counties pays a slightly higher 2.1% but you have to tie your money up until 31 May 2016.
Top internet-based easy-access taxable accounts come from National Counties Online Saver at 1.36% before tax (1.09% after tax), West Bromwich WebSaver at 1.35% (1.08%) and Sainsbury's Bank Extra Saver at 1.3% (1.04%). Britannia pays a higher 1.5% (1.2%) on Select Saver available through Co-op and Britannia branches or over the telephone but you are limited to making four withdrawals a year from the account.
Fixed-rate deals continue to fall with Tesco cutting its top rates on Friday. The best one-year rate is 1.9% (1.52%) from internet bank, FirstSave or 1.75% (1.4%) from Leeds Building Society. FirstSave pays 2.35% (1.88%) for two years or 2.6% (2.08%) for three 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.