Rates on easy-access cash Isas continue to fall
BM Savings, part of Halifax, has also cut its rate to new savers. It now pays 1.25% on balances up to £20,000 and 1.5% on larger balances. Even after the cut, the 1.5% makes it a leading rate for those looking to transfer their cash Isas.
NatWest also pays 1.5% on balances over £25,000 while Nationwide's Instant Isa Saver pays 1.5% for a minimum £1,000.
Top deals for this year cash Isa money come from Cheshire and Derbyshire building societies, both part of Nationwide, at 1.6%. National Savings & Investments and Nationwide pay 1.5%.
On fixed-rate deals you can earn a slightly higher 1.65% for a year with Tesco Bank and Kent Reliance, or 1.6% with Aldermore Bank. The top two- and three-year deals come from Nationwide at 2.05% and 2.25% respectively.
On taxable accounts, the best rate comes from Britannia, part of Co-op Bank on its new Select Saver issue 5 at 1.65% before tax (1.32% after tax). Newcastle and Kent Reliance both pay 1.25% (1%). Nationwide also pays 1.25% (1%) but limits you to five withdrawals a year.
On fixed rate deals Kent Reliance pays 1.9% (1.52%) for one year or 2.25% (1.8%) for two years. The next best two year deal comes from Shawbrook Bank at 2.05% (1.64%).
The new 18 month bond from Leeds Building Society pays 2% (1.6%) fixed until 31 January 2016.
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.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
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.