Savings update: move quickly to catch Shawbrook Bank’s top-paying deal
Shawbrook Bank is still paying a top 2.15 per cent before tax (1.72 per cent after tax) on its one-year fixed-rate bond, but it might not be around for very long. The Metro Bank deal at 2.1 per cent (1.68 per cent) was only on offer for a few days before being withdrawn from sale.
Other good deals for one year include Charter Savings Bank at 2.07 per cent (1.66 per cent), along with RCI Bank and FirstSave at 2.06 per cent (1.65 per cent).
Shawbrook also pays a top 2.35 per cent (1.88 per cent) for 18 months. That's the same rate as the top two-year bonds from RCI and Harrods banks.
On easy-access taxable accounts the best rate is 1.65 per cent (1.32 per cent) from RCI Bank Freedom Account. With this bank you are not covered by the UK compensation scheme. If the bank goes bust you claim from the European scheme, where the maximum amount is €100,000 (around £70,000).
The next best rate is Virgin Money Defined Access Saver at 1.51 per cent (1.21 per cent), but the bank restricts you to making three withdrawals a year at most from your account.
On tax-free cash Isas, the top deal with no bonus and no withdrawal restrictions comes from Coventry Building Society at 1.5 per cent.
Post Office Online Cash Isa pays a whisker more at 1.51 per cent, but the rate includes a 0.86 percentage point bonus for the first 12 months, after which the rate drops to 0.65 per cent. Virgin Money Defined Access Isa rate is 1.56 per cent but it limits you to making three withdrawals a year.
The best fixed-rate cash Isa deals come from Shawbrook Bank at 1.95 per cent fixed for one year. For two years Coventry Building Society pays 2.05 per cent fixed until 30 November 2017.
All accept transfers from other providers.
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.