Tesco Bank raises top-paying savings rate
Tesco Bank is the latest to raise the rate on its easy access internet account to 1.4% before tax (1.12% after tax). It joins AA Savings Internet Extra 16 and Post Office Online Saver Issue 12 which both pay 1.4% (1.12%).
All three come with a short-term bonus which lasts for a year. After this the AA account, where the deposit taker is Halifax, drops to 0.5% (0.4%), while both the Tesco and Post Office account drop to 0.75% (0.6%).
Saga has launched a new version of its Telephone Saver at a slightly higher 1.5% (1.2%), available for those aged 50 and over. The rate drops to 0.4% (0.5%) after a year.
The best deal where the initial rate is not boosted by a bonus and there are no withdrawal restrictions comes from Sainsbury's Bank at 1.35% (1.08%).
On fixed rates the top one-year deal comes from Tesco at 1.85% (1.48%) and Post Office at 1.8% (1.44%). On two-year deals you can earn 2.3% (1.84%) with Kent Reliance.
On cash Isas you can earn a top 1.55% tax-free on easy access accounts with both BM Savings Extra Isa 11 and Post Office Premier Isa 7. Both come with an initial bonus, but, unusually the Post Office deal runs for 18 months rather than the usual 12 months.
The best deal without a bonus comes from National Savings & Investments and GE Capital Direct, both offering 1.5%. But you cannot transfer your existing cash Isas into the National Savings account - you are limited to putting just this year's cash Isa allowance into the account.
On fixed-rate cash Isas, Post Office pays 1.7% for one year, while at Barclays you can earn 2.02% fixed for two years and have access to some of your money without losing interest. Both Skipton Building Society and AA Savings pay 2% fixed for two years.
This article was written for our sister website Money Observer
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.