Savings update: Virgin Money raises top-paying cash Isa rate to 1.51%
Savings rates continue to shift this week with falls outweighing any rises.
Virgin Money has raised the rate for its easy-access cash Isa to a top 1.51%. The new tax-free deal applies to those already in its Defined Access Isa Issue 4, as well as to those opening an account now. You can only make three withdrawals a year from your account.
The move puts it just ahead of Coventry Building Society, which pays 1.5% on its Easy Access Isa. Both are available online, through branches, by post or over the telephone and accept transfers from other providers.
On fixed rate cash Isas the best one-year deal comes from Leeds Building Society and Virgin Money, both at 1.65%. For two years, Kent Reliance, Leeds Building Society, Principality Building Society and Shawbrook Bank all pay 1.85%.
On easy-access accounts Paragon Bank has closed its Limited Edition Easy Access 2 at 1.46% before tax (1.17% after) to new savers.
The best deal is 1.65% (1.32%) from RCI Bank. With this French-owned bank your money is covered by the European compensation scheme which gives €100,000 (around £76,000), rather than by the UK scheme.
The next best rate comes from Shawbrook Bank 1.45% (1.16%). At Virgin Money the rate is 1.41% (1.13%), but you are limited to making three withdrawals a year.
On taxable bonds, the top one-year fixed rate deal remains at 2.06% before tax (1.65% after) from French-owned RCI Bank. Charter Savings Bank pays 1.85% (1.48%).
Over two years, RCI pays 2.35% (1.88%) and Close Brothers 2.05 % (1.64%). Shawbrook Bank, Charter Savings Bank and Kent Reliance all pay 2%.
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.