New bonus deal makes Tesco best internet savings rate
Tesco has raised the rate it pays to new savers opening its Internet Saver to 1.35% before tax (1.08% after tax). The rate includes a 0.6 (0.48) percentage point bonus payable for the first year you are in the account.
The new deal makes it the best rate for accounts run over the internet.
The top internet-based deal where the rate is not boosted by an initial bonus is 1.25% from Yorkshire, Leeds and Newcastle building societies.
Newcastle and Leeds building societies also pay 1.25% (1%) through their branch accounts.
The very top easy access rate comes from Britannia, part of Co-op Bank, at 1.5% (1.2%), but you are limited to four withdrawals a year.
On cash Isas you can earn a tax-free 2% through Coventry Building Society's Branch Instant Isa, but the deal is only available through its branches.
BM Savings is the next best at 1.65% on a minimum £20,000. Dunfermline, Cheshire and Derbyshire building societies, all part of Nationwide, pay 1.6% but don't allow transfers.
On fixed-rate cash Isas Halifax pays a top 1.65% for a year, or 2% for 18 months. Nationwide and Halifax both pay a slightly higher 2.05% for three years.
On fixed-rate taxable accounts Shawbrook pays a top 1.95% (1.56%) for a year, or 2.05% (1.64%) for 18 months. With Close Brothers you can earn 2.4% (1.92%) for two years, while Shawbrook pays 2.75% (2.2%) for three years.
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.