Skipton and Post Office lead moves to higher rates
Rates on online easy-access accounts continue to edge up with the launch of two accounts paying 1.4% before tax (1.12% after tax).
The new Skipton Limited Edition eSaver Issue 2 pays 1.4% (1.12%) and there is no initial bonus to boost the rate for the first year.
Post Office Money, where the deposit taker is Bank of Ireland, also pays 1.4% (1.12%) on its new Online Saver Issue 15. But this rate includes a bonus for 12 months after which the rate drops to just 0.65% (0.52%).
They join other top payers that include BM Savings, part of Halifax, at 1.6% (1.28%) with its Online Extra Issue 18. But it comes with a 12-month bonus after which the rate falls to 0.5% (0.4%). Paragon Bank Limited Edition Easy Access account pays 1.46% (1.17%), with no bonus and no withdrawal restrictions.
RCI Bank - part of French automobile manufacturer Renault - pays a higher 1.65% (1.32%) on its Freedom Account. With this bank you are covered by the European deposit protection scheme for a maximum €100,000 (around £70,600).
On fixed-rate bonds the top one-year rate of 2.06% (1.65%) comes from new challenger banks Charter Savings and RCI. For two years you can earn 2.35% (1.88%) with RCI Bank or 2.34% (1.87%) with Paragon Bank.
On easy-access cash ISAs Virgin Money pays 1.51% tax-free but you are limited to making three withdrawals a year from your account.
National Savings & Investments pays 1.5% but you can't transfer your existing cash ISAs into this account. Nationwide at 1.4% has no withdrawal restrictions and you can transfer your existing cash ISAs into its Instant ISA Saver issue 3.
On fixed-rate cash ISAs the top deals include 1.75% from Shawbrook Bank for one year or 2% from Halifax, Shawbrook, Virgin Money and Skipton Building Society for two years. Coventry Building Society pays a slightly higher 2.05% fixed until 30 November 2017.
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.