Top savings rates keep slipping
Savings rates continue to fall, with AA Savings cutting the rate for new savers on its Internet Extra easy-access account. It now pays 1.25% before tax (1% after tax) for new savers. Previously it paid a top 1.4% (1.12%).
The new deal includes a bonus for the first 12 months, after which the rate drops to 0.5% (0.4%).
For new savers the best easy-access accounts come from ICICI Bank Super Savings and Post Office Online Saver issue 13, both at 1.4% (1.12%). The Post Office account includes a bonus for the first year.
On fixed-rate bonds the best one-year deal comes from State Bank of India at 1.8% (1.44%), while Paragon, Kent Reliance, Aldermore Bank and Harrods Bank all pay 1.75% (1.4%). Harrods Bank pays 1.95% (1.56%) on its 18-month fixed rate deposit account.
The best two-year deal is 2.33% (1.86%) from Secure Trust Bank, while State Bank of India pays 2.25% (1.8%).
On tax-free fixed-rate cash Isas, the best one-year deal is 1.65% from both Tesco Bank and Virgin Money. For two years Post Office pays 1.95%, while both Kent Reliance and Aldermore Bank pay 1.85%.
On easy-access cash Isas you can earn a tax free 1.5% on Post Office Premier Cash Isa. The rate includes a 0.85 percentage point bonus for the first 18 months you are in the account.
Top deals with no bonus include Barclays Bank Instant Cash Isa issue 1 at 1.49% on a minimum £30,000, or Sainsbury's Bank at 1.45%. All three accept transfers from other providers.
National Savings & Investments pays 1.5% on its Direct Isa but you cannot move the cash Isas you hold with other providers into this account.
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.