Savings update: Little sign of high street banks at top of rates tables
Savers suffered more rate falls last week while Nationwide, the largest building society, has said it will cut rates on some of its accounts from the start of next month.
The top easy-access deal is 1.45% before tax (1.16% after) from French-owned online bank RCI, followed by Coventry Building Society at 1.3% (1.04%). The Coventry deal is on offer online, in its branches and through the post.
On fixed rate deals the best one-year rate comes from Swedish-owned Ikano Bank at 1.75% (1.4%) – although iPad and iPhone users can sign up for the 2% (1.6%) on offer from the new Atom Bank. For two years Ikano Bank pays 2% (1.6%) and Atom 2.2% (1.76%).
On cash Isas M&S Bank pays a top 1.4% tax-free fixed for one year. Both M&S and Coventry offer a slightly higher 1.5% if you are prepared to tie your money up for two years.
The top easy-access cash Isa deal is 1.4% with the Coventry, but you can’t transfer your existing cash Isas into this account. Yorkshire Building Society at 1.35% and Virgin Money at 1.31% both accept transfers, but they limit the number of withdrawals you can make from your account each year. Sainsbury’s Bank and M&S Bank both pay 1.3% and accept transfers.
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.