TSB ups Monthly Saver rate to 5%

TSB ups Monthly Saver rate to 5%

TSB has increased the rate it pays on its Monthly Saver account from 2% gross/AER to 5%.

Savers must have a TSB current account to open the Monthly Saver and the most they can deposit each month is £250. The minimum contribution is £25.

After tax, the rate received by basic-rate taxpayers is 4% and higher-rate taxpayers is 3%.

First Direct's Regular Saver - also only available to its current account customers - pays 6% gross/AER and also has a minimum contribution of £25 a month, but its maximum limit is £300.

For new customers not wanting to move their current account, the best rate available on a regular saver is 4% from Kent Reliance.

TSB has also improved the rate on its 2 Year Fixed Bond from 1.35% gross/AER to 1.5%.

Basic-rate taxpayers with £2,000 to put away will receive a rate of 1.08% after tax, while high-rate payers will earn just 0.81%.

However, the best rate on a similar bond currently available on the market - according to Moneywise.co.uk/compare - is 2.3% gross/AER on Punjab National Bank (International)'s 2 Year - < 3 Year Fxd Rate Deposit.

The rate is fixed for 24 months. The minimum deposit is £500 but can only be opened in branch or by post.

TSB has also increased the rate on its 2 Year Fixed Rate Cash ISA to 1.5% AER, up from 1.4%. The minimum opening balance is £3,000 and transfers in are allowed. Withdrawals made within the fixed rate period will incur a charge of 180 days' tax-free interest on the amount taken out.

The best-buy two-year fixed cash Isa available is currently Kent Reliance's Flexible Fixed Rate NISA Two Year Issue 17, paying 1.85% AER. The minimum opening deposit is £1,000 and transfers in are allowed.

Your Comments

TSB Monthly Saver at 5% for one year only, the account then reverts to 'Easy Saver' account with 0.5% interest for the first year, then 0.2% thereafter. Not as good as it appears at first!

Kent Reliance 4% saver can only be opened in branches. Not many in Yorkshire. Is there a snag to everything?

Hi WestNab, the way these work is that they always "mature" onto a low-rate account after a year, and you have to act. You need to move the savings and start a fresh new account. I do this every year with First Direct, and I'll also be trying the TSB one, now that I opened a "5%" current account with them. The current account only requires £500 in (and straight out again!) each month, and if you keep a balance of £2k in for the year  you'll make about £78. It involves a bit of effort and timing, but it's the only way to get something worthwhile out of an ordinary bank/bsoc these days! Regards, Mike.