Top-paying 'pensioner bonds' close today
Savers aged 65 or more have until tonight to open the top-rate bonds on sale from National Savings & Investments. The 65+ Guaranteed Growth Bonds will be withdrawn from sale just before midnight tonight (15 May).
The bonds pay far higher rates than on offer from banks and building societies. The one-year deal pays 2.8% before tax (2.24% after tax) and the three-year version 4% (3.2%).
The minimum investment is £500 and the maximum £10,000 per person per bond - so a married couple could each hold a three-year bond and a one-year bond, making a joint total of £40,000.
Interest is paid at the end of the term, however, so you will see no interest until your bond matures. There is no option to take your interest each month.
Other savings rates
The top one-year bond available to all from banks and building societies comes from Firstsave at 1.9% (1.52%), followed by Kent Reliance at 1.85% (1.48%).
For two years you can earn 2.21% (1.77%) with Paragon Bank or 2.15% (1.72%) with Firstsave, while the top three-year deal is 2.5% (2%) from Paragon Bank.
On easy-access accounts, Virgin Money pays 1.41% (1.13%) but you are limited to making three withdrawals a year. Paragon Bank pays 1.35% (1.08%) with no such restrictions.
On tax-free cash Isas, National Savings & Investments pays 1.5% on its Direct Isa, but you cannot transfer your existing cash Isas into this account. Barclays Instant Cash Isa 1 pays 1.49% on a minimum £30,000, while at Nationwide Instant Isa Saver issue 3 the rate is 1.4%.
If you are willing to tie your money up for a year tax-free, you can earn 1.65% with Shawbrook Bank or 1.62% with Skipton Building Society. Shawbrook, Aldermore and Kent Reliance banks all pay 1.85% 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.
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.