Savings update: easy-access and fixed-rate deals rise
Rates are creeping up on easy-access accounts. Kent Reliance's new Easy Access Issue 10 pays a top 1.65% before tax (1.32% after) on a minimum £1,000. The account is available online, over the phone or through its branch network.
Fixed-rate deals are also rising, with the best deal now at 2.1% (1.68%) fixed for one year, also from Kent Reliance.
Charter Savings Bank is just behind at 2.06% (1.65%). If you are willing to tie your money up for two years you can earn 2.35% (1.88%) with both Aldermore Bank and Kent Reliance.
Cash Isa rates remain lower. On easy-access cash Isas the best deals include National Savings & Investments (NS&I) Direct Isa at 1.5% and Virgin Money's Defined Access at 1.51%.
NS&I does not accept transfers from other providers. Virgin does, but the account limits you to making three withdrawals a year.
The top deal which accepts transfers and comes with no withdrawal restrictions is Nationwide Instant Isa Saver at 1.4%.
On fixed-rate cash Isas the best one-year rate is 1.75%, available both from Tesco Bank and Shawbrook Bank.
For two years Coventry BS pays 2.05% fixed until 30 November 2017. Halifax, Virgin Money and Skipton Building Society all pay 2% fixed for two years.
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.