Top savings rates creep up for new savers
Some banks and building societies have been edging up rates for new savers. BM Savings has raised the rate on its easy-access Online Extra to a top 1.6% before tax (1.28% after tax).
It actually gives new savers a small positive return now that inflation has fallen to 1.2% a year. The rate includes a bonus for the first 12 months after which it drops to 0.5% (0.4%).
The top deal without a bonus is 1.3% (1.04%) from Virgin Money.
On fixed rate deals you can earn 1.9% (1.52%) on the new bond, launched on Monday, from National Counties Building Society, fixed until 29 June next year.
And those looking for tax-free cash Isas can earn 1.6% with BM Savings Isa Extra Issue 12, launched last week. Once again the rate includes a bonus for the first year and you can transfer your existing cash Isas into the account.
The best deal with no short-term bonus to boost the headline rate comes from National Savings and Investments at 1.5%, but you cannot transfer your cash Isas from other providers into the account.
The top deals with no bonus which does accept transfers come from Teachers Building Society and Sainsbury's Bank, at 1.45%. If you have built up £30,000 or more in your cash Isas, Barclays pays a slightly higher 1.49%, with no initial bonus.
Top fixed-rate cash Isas include Post Office at 1.7% and Tesco Bank at 1.65% for one year and Virgin Money at 2.1% for two years.
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.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
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.