Trio of banks' rates creep over the 2% mark
Fixed-rate bond rates are edging up, with four banks paying 2% before tax (1.6% after tax) for a year.
Charter Savings Bank and French-owned RCI Bank both pay 2.06% (1.65%), while Kent Reliance has upped its rate to 2.02% for new savers and Aldermore Bank to 2% (1.6%). Tesco and Shawbrook banks now both pay a slightly lower 1.95% (1.56%).
The top deals for two years come from Secure Trust Bank at 2.38% (1.9%) and Aldermore Bank at 2.35% (1.88%) while Tesco, Kent Reliance and Charter Savings banks all pay 2.25% (1.8%).
On easy-access accounts RCI Bank, part of the Renault group, pays the best deal at 1.65% (1.32%). Your money is covered by the French deposit protection scheme which gives €100,000 (£70,800) of cover if the bank goes bust.
The best deal where your money is covered by the UK scheme with a higher £75,000 comes from BM Savings, part of Halifax. Its Online Extra Issue 18 pays 1.6% (1.28%), but this includes a bonus for 12 months, after which the rate drops to 0.5% (0.4%).
Virgin Money Defined Access Saver pays at 1.51% (1.21%), but on this account you are limited to making a maximum of three withdrawals a year.
Three top-paying accounts with no bonus and no withdrawal restrictions are Skipton Building Society's Limited Edition eSaver issue 2 at 1.4% (1.12% after tax), Kent Reliance's new High Balance Easy Access account 1.55% (1.24%) with a minimum £20,000, and the Kent Reliance Online Saver minimum £1,000 at 1.45% (1.16%).
On tax-free cash Isas, Shawbrook Bank pays 1.75% and Virgin Money's 1.71% for one year.
For two years you can earn 2% with Halifax, Shawbrook Bank, Skipton Building Society and Virgin Money, while at Coventry Building Society the rate is 2.05% fixed until the end of November 2017.
Leeds Building Society's new account pays 2.3% for three years.
On easy-access cash Isas, National Savings & Investments Direct Isa pays 1.5% and Virgin Money Defined Access Isa pays a slightly higher 1.51%, but you are limited to three withdrawals a year. You can transfer your existing cash Isas to Virgin Money, but not to the National Savings account.
Nationwide at 1.4% accepts transfers and does not limit you to the number of withdrawals you make.
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.