Sainsbury's relaunches eSaver Special at lower rate
Sainsbury's Bank has re-launched its popular eSaver Special savings account, paying 1.30% AER.
The supermarket bank had closed its top-paying easy-access account in mid-December, when it was paying 1.55% before tax. That meant it was paying 1.24% to basic-rate taxpayers and 0.93% to higher-rate payers.
While the eSaver Special is back, the rate has fallen to 1.04% after tax for a basic-rate payer, or 0.74% for a higher-rate payer.
There's no teaser rate and between £1,000 and £100,000 can be deposited in the account. Interest will be paid annually and the account can be opened and managed online but deposits can also be made with SaveBack in Sainsbury's stores.
The account is currently beaten by the Britannia Select Access Saver 5, paying 1.65% before tax, according to Moneywise.co.uk/compare.
After tax, that leaves a basic-rate payer with a rate of 1.32% and a higher-rate payer with 0.99%.
The minimum deposit is £1,000, the same as the Sainsbury's account, but the maximum deposit is only a quarter of the supermarket bank's at £25,000. Interest is paid annually, there is no teaser rate and the account cannot be opened or managed online.
There are some withdrawal conditions in that a bonus is payable provided no more than four withdrawals are made per year.
If five or more are made the interest rate will be 0.10% gross 1 January in the following year.
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.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.