New savers rates keep on falling
Rates for new savers looking for an easy-access account continue to fall.
Post Office has cut its rate from 1.4% before tax (1.12% after) to 1.2% (0.96%) for new savers, while BM Savings rate is down from 1.25% (1%) to 1% (0.8%). Both deals include a bonus payable for the first 12 months.
The top rate on easy-access internet-based accounts is 1.25% (1%) from State Bank of India and Kent Reliance. Neither are boosted by an initial bonus.
On fixed-rate bonds the top one-year rate comes from National Savings and Investments at 2.8% (2.24%), but this deal is only open to those age 65 or over and the maximum investment is £10,000. The next best rate comes from Harrods Bank at 1.75% (1.4%), followed by Post Office at 1.7% (1.36%).
For two-year deals, Harrods Bank pays 2.25% (1.8%) and Close Brothers 2.15% (1.72%). For three years National Savings leads the field with 4% (3.2%) for those age 65 or over. Trailing far behind, the next best deals come from Harrods Bank and Close Brothers, both at 2.5% (2%).
On easy-access cash Isas you can earn a top tax-free 1.5% with National Savings & Investments Direct Isa, but you can't transfer your existing cash Isas into this account. There is no initial bonus on this account. Post Office Premier Isa also pays 1.5% - and accepts transfers - but this includes a bonus for the first 18 months. Best deal for transfers with no bonus is Barclays Bank Instant Cash Isa 1 at 1.49% on £30,000 or more.
On fixed-rate cash Isas the best one-year deal is Virgin Money at 1.65%, while Post Office pays 1.95% fixed 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.