Watch out for disappearing bonuses on savings accounts
Savers should seek out alternatives to popular accounts where bonuses have run their course.
From 14 July savers with Yorkshire Building Society will see their rate on Triple Access Saver 3 fall to 1.2% before tax (0.96% after), down from 1.4% (1.12%). Despite the fall, the rate is still attractive for a branch-based account. The top deal, however, comes from Britannia Select Saver 5 at 1.65% (1.32%) but you are limited to four withdrawals a year.
On online accounts Tesco Internet Saver pays 1.35% (1.08%) including a bonus for the first 12 months. With rival Sainsbury's Bank e-Saver, you earn 1.3% (1.04%) where the rate is not boosted by an initial bonus.
Other cuts in the pipeline include NatWest Cash Isa. From August 1 the rate drops to a tax-free 0.75%, down from 1%, on balances up to £25,000. The rate for higher amounts drops to 1% from its current 1.25%.
Best Cash Isas
The top easy access cash Isa rate comes from BM Savings Extra Isa 11 at 1.55% and you can transfer your existing cash Isas into the account. But the rate drops to 0.5% after a year so you have to be prepared to move your money.
Nationwide Instant Isa Saver pays 1.5%. The rate is not boosted by an initial bonus and it accepts transfers from other providers. Virgin Money also pays 1.5% on its Cash E-Isa.
On fixed rate cash Isas the top deals include Britannia and Tesco Bank at 1.65%. Halifax pays 1.7% for 18 months while at Nationwide you earn 2.05% fixed for two years.
Best taxable fixed rates
The best deals on one-year fixed rate bonds where the interest is taxable include FirstSave at 1.88% (1.5%), Investec at 1.85% (1.48%) and BM Savings at 1.75% (1.4%).
If you are willing to tie your money up for two years you can earn 2.2% (1.76%) with Investec, 2.16% (1.73%) with Kent Reliance or 2.1% (1.68%) with the new Paragon Bank and FirstSave.
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.