Tesco and Aldermore pay best one-year savings rates
The top one-year rate is 1.65% from Tesco Bank and Aldermore Bank, while Halifax pays 1.55%. The best two-year deal comes from Nationwide at 2.05%.
On easy access cash ISAs you can earn 1.55% with BM Savings including a bonus for the first year, after which the rate drops to 0.5%. Virgin Money pays 1.5% with no bonus.
Both accept transfers in from the cash ISA savings you have already built up.
Cheshire and Derbyshire BS pay a slightly higher 1.6%, but they are only available through their branches and you can only put in this year's cash ISA allowance.
On taxable easy access accounts the best deal comes from Sainsbury's Bank e-Saver Special at 1.35% before tax (1.08% after basic rate tax) with no strings attached and no bonus boosting the initial rate.
West Bromwich Building Society Websaver Limited Access pays a slightly higher 1.4% (1.12%) but you are limited to making just three withdrawals a year.
On taxable bonds Investec pays 1.95% (1.56%) and Paragon Bank 1.9% (1.52%). For two years you can earn 2.35% (1.88%) with Aldermore Bank.
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.
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.