Savings update: top-paying accounts begin to close
Fixed-rate deals are falling with several banks closing their top-paying accounts to new savers.
The best one-year deal comes from RCI Bank at 2.06 per cent before tax (1.65 per cent after).
With this French-owned bank your money is covered by the European compensation scheme, which gives €100,000 (around £74,500), rather than the UK scheme.
Paragon Bank pays 2.01 per cent (1.61 per cent) and Aldermore Bank 2 per cent (1.6 per cent).
For two years the best deal is 2.35 per cent (1.88 per cent) with RCI Bank, or 2.25 per cent (1.8 per cent) with Close Brothers.
Easy access accounts
On easy-access accounts you can earn 1.65 per cent (1.32 per cent) at best from internet accounts run by both RCI and ICICI banks.
Virgin Money pays 1.41 per cent (1.3 per cent) both online and in the high street, but you are restricted to making three withdrawals a year from your account.
The best one-year fixed rate cash Isa comes from Tesco Bank with a tax-free 1.75 per cent, followed by Virgin Money, Shawbrook Bank and Leeds Building Society all at 1.65 per cent.
For two years the top rates is 2 per cent from State Bank of India (UK), while Leeds Building Society pays 1.9 per cent.
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.