Long-suffering savers see another drop in rates
BM Savings has closed its Internet Extra Isa at 1.55%, replacing it with another version for new savers at 1.35%.
Hinckley & Rugby Building Society has cut by 0.15 percentage points the rates on 19 accounts for existing savers, including its Premier Saver which now pays 1.1% before tax (0.88% after tax). Metro Bank will cut rates for new savers from today.
The top easy-access cash Isa rate comes from Post Office Premier Cash Isa at a tax-free 1.55%, including a 0.8 percentage point bonus for the first 18 months. You can transfer your existing cash Isas into the account.
The best deal without a bonus comes from National Savings & Investments Direct Isa at 1.5% but this account does not accept transfers. Barclays pays 1.49% on a minimum £30,000 on its Instant Cash Isa issue 1, while at Sainsbury's Bank the rate is 1.45%. Both accept transfers.
Fixed-rate Cash Isas
On fixed-rate cash Isas the best one year deal is 1.7% from Post Office or 1.65% from Virgin Money. Barclays and AA Savings, part of Halifax, both pay 2% for two years.
On taxable accounts the over 50s can earn 1.55% (1.24%) with Saga Internet Saver.
For others the best deal is 1.4% (1.12%) from AA Savings, Tesco Bank and Post Office. All four accounts include a bonus for the first year, after which the rate will drop as low as 0.4% (0.5%).
If you prefer an account without a bonus then State Bank of India and Kent Reliance pay 1.25% (1%).
On fixed-rate bonds First Save pays 1.85% (1.48%) for one year, while the top two-year rate is 2.25% (1.8%) from State Bank of India.
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.