BM Savings and Tesco offer top savings rates
BM Savings, part of Halifax, now pays 1.35% before tax (1.08% after tax) on the latest issue of its Online Extra, placing it among the top headline rates for easy access accounts. But the rate drops to 0.5% (0.4%) after 12 months.
Tesco Bank Internet Saver also pays 1.35% (1.08%) with a bonus for the first 12 months, after which the rate falls to 0.75% (0.6%).
Sainsbury's Bank eSaver Special gives better value at 1.35% (1.08%) with no bonus.
West Bromwich WebSaver Limited Access pays a slightly higher headline rate of 1.4% (1.12%) but you are limited to three withdrawals a year. Coventry PostSaver also pays 1.4% (1.12%) with a more generous 12 withdrawals a year.
On fixed-rate bonds, top one-year rates come from Investec Bank at 1.95% (1.56%) and Paragon Bank at 1.9% (1.52%). For two years you can earn 2.3% (1.84%) with Investec and Kent Reliance.
On tax-free cash Isas Cheshire and Derbyshire building societies, both part of Nationwide, pay 1.6% on their easy access accounts but you can't transfer your existing cash Isas into the account.
For transfers BM Savings pays 1.55% including a bonus for the first year. Best deals for transfers with no bonus include Virgin Easy Access Cash Isa and Nationwide Instant Isa Saver, both at 1.5%.
On fixed rate cash Isas the top one-year rate at 1.65% comes from Kent Reliance and Tesco Bank. Yorkshire Building Society's new 18-month deals pays 1.75% while for two years Nationwide pays a top 2.05%.
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.