Challenger banks lead savings tables
Virgin Money has closed its Defined Access Easy Access account paying 1.41% before tax (1.13% after) to new savers. The top easy access rate is 1.35% (1.08%) from internet bank Paragon Bank with no withdrawal restrictions and no initial bonus.
Tesco Bank also pays 1.35% (1.08%) with no limit on the number of times you take money out each year. But the rate includes a 0.6 (0.48) percentage point bonus for the first 12 months, after which the rate drops to 0.75% (0.6%).
On fixed rate deals, both FirstSave and Shawbrook Bank pay 1.9% (1.52%) and Kent Reliance 1.85% (1.48%) for one year. Top two-year deals include 2.21% (1.77%) from Paragon Bank and 2.15% (1.72%) from FirstSave.
Tax-free cash Isa rates
On tax-free cash Isas the top easy access rate at 1.5% comes from National Savings & Investments, available by phone or online.
If you are willing to tie your money up on a fixed-rate deal, you can earn a tax-free 1.62% with Skipton Building Society for one year or 1.6% from Nationwide Building Society along with Shawbrook, Aldermore, Virgin Money and Post Office banks.
For two years the top Isa rate comes from Aldermore and Kent Reliance at 1.85% while both Skipton and Nationwide pay 1.8%.
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.