Banks continue to cut savings rates
Banks and building societies continue to pare the rates they offer on short-term fixed rate bonds.
The top one-year deal comes from ICICI Bank at 1.85% before tax (1.48% after tax), followed by National Counties Building Society at 1.76% (1.41%), with banks Aldermore and Harrods both paying 1.75% (1.4%).
You'll earn marginally more if you are willing to tie your money up for a slightly longer term. Harrods Bank pays 1.95% (1.56%) for 18 months. For two years the best rate is 2.25% (1.8%), again from Harrods Bank, which also pays a top 2.5% (2%) for three years.
On easy access accounts, National Counties Building Society is among the top deals with 1.41% (1.13%) on its Online Saver.
Easy-access cash Isas
On easy-access cash Isas, Post Office Premier Isa pays a top 1.5%, but the rate includes a bonus of 0.85 percentage points payable for the first 18 months you are in the account, after which it drops to 0.75%.
The best deal without a bonus is National Savings & Investments at 1.5%, but you cannot transfer your existing cash Isas into this account.
Barclays pays 1.49% on a minimum £30,000 and accepts transfers. The next best deal for both transfers and new money is Sainsbury's Bank at 1.45% on £500 or more.
On fixed-rate cash Isas, Virgin Money pays a top 1.7% for one year, while Post Office pays 1.95% for two years. Both accept transfers.
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.
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.