Santander slashes Help to Buy Isa rate for new customers
The interest rate on the account was increased to 4% in March, to match the rate offered by Halifax. But Halifax cut its Help to Buy Isa rate for new customers to 2.5% earlier this month, and it did not take Santander long to follow.
Santander will at least honour its old rates for anyone who signed up for its Help to Buy Isa before 23 May, who will keep earning 4%.
This latest cut means only a handful of aspirational homeowners can now access the top Help to Buy Isa rates. The only deposit takers to pay 4% are Cumberland Building Society and Penrith Building Society - which is the UK's smallest building society - but these accounts are only open to local customers in parts of the north west of England and southern Scotland.
For everyone else, the best Help to Buy Isa rate is now 3% from Virgin Money. See our guide on Which Help to Buy Isa should I get?
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.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
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.