Savings update: top fixed-rate bonds wiped out
Banks and building societies continue to trim the rates they offer new savers on fixed rate bonds.
The top deal remains at 2.06% before tax (1.65% after) from French-owned RCI Bank. But Charter Savings Bank has trimmed its rate from 1.85% (1.48% after tax) to 1.81% (1.45%) for new savers.
Meanwhile, Paragon has withdrawn its one-year deal at 1.8% (1.44%), while United Trust Bank has cut from 1.8% (1.44%) to 1.7 % (1.36%).
With RCI Bank your money is covered by the European compensation scheme, which gives €100,000 (around £77,000 at the current exchange rate), rather than by the UK scheme.
Easy access deals
RCI also pays the top easy-access rate at 1.65% (1.32%), followed by Shawbrook Bank at 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 fixed-rate cash Isas the best one-year deal is from Virgin Money, at 1.6% tax-free. Shawbrook Bank and Kent Reliance both pay 1.85% for two years.
It is only bettered by Virgin Money's 1.51% on its Defined Access Isa, which limits you to making three withdrawals a year.
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.