Newcomer Renault tops savings table
BM Savings has launched a top-paying easy-access account at 1.5% after tax (1.2% before). The rate on its Online Extra Issue 17 includes a bonus for the first 12 months you are in the account, after which it drops to 0.5% (0.4%).
Newcomer French-owned RCI Bank, launched this week, also pays 1.5% (1.2%) with no bonus on its Freedom Savings Account. It is available through moneysupermarket.com for the next two weeks.
But RCI Bank is not covered by the UK Financial Services Compensation Scheme. Instead you are covered by the European equivalent, which provides protection of up to €100,000 – around £73,000. The UK scheme gives £85,000 worth of cover if a bank or building society goes bust.
The top easy-access rate where the rate is not boosted by an initial bonus and comes under the UK protection scheme is available from Sainsbury's Bank eSaver Special at 1.3% (1.04%), but you need a minimum £30,000 to earn this rate. GE Capital Direct pays the same rate on £500 or more.
On fixed-rate deals the new one-year bond from Charter Savings Bank pays a top 1.91% (1.53%), while the top two-year deal comes from FirstSave at 2.15% (1.72%). Hampshire Trust new bond pays 2.35% (1.88%) for three years.
On tax-free cash Isas you can earn 1.5% from National Savings & Investments' easy-access Direct Isa, although you cannot transfer previous years' cash Isas into the account. For transfers the top easy-access deal comes from Barclays Instant Isa Issue 1 at 1.49% on £30,000 or more, or 1.4% from Nationwide or Sainsbury's Bank.
On fixed rates Shawbrook Bank pays a tax-free 1.65% for one year. You earn 1.85% for two years with Kent Reliance, while Nationwide, Skipton Building Society, Metro Bank and Shawbrook Bank all pay 2% for three 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.