Savings update: rates fall in expectation of interest rate cut
Fixed-rate deals continue to fall ahead of the expected cut in Bank of England base rate next month from 0.5 to 0.25%.
Charter Savings Bank has cut the rate on its one-year fixed rate bond to 1.66% before tax (1.33% after tax), down from last week's 1.79% (1.43%). It is the top online bond on offer.
On the high street the best you can do is 1.5% (1.2%) from Co-op Bank's Britannia Bond. Charter Savings Bank pays 1.7% (1.36%) fixed for 18 months or 1.81% (1.45%) for two years.
French-owned RCI Bank pays a higher 1.9 per cent (1.52 per cent) for two years. With this bank your money is covered up to €100,000 by the French deposit protection scheme rather than the UK scheme.
Premier League-linked bond
Virgin Money's new Champion Bond is a one-year fixed rate deal which will pay a tempting 2.5% (2%) if Manchester United win the 2016/17 Premier League title.
The Red Devils are currently second favourites to win behind fierce rivals Manchester City. The bond is on offer online or through Virgin Money branches.
Even if Man Utd don't win, you are still set to earn 1.25% (1 per cent), one of the top fixed rate deals on offer on the high street.
On easy-access accounts the top rate is still 1.45% before tax (1.16% after) from French-owned RCI Bank's Freedom account.
Virgin Money Defined Access Saver, available both online and through branches, pays 1.26% (1.01%) but you are limited to making three withdrawals a year on this account.
If you make more your rate tumbles to 0.5% (0.4%). Internet-based bank Shawbrook pays 1.25% (1%).
The best easy-access cash Isa rate comes from Coventry BS at 1.3% but you can't transfer your existing cash Isas into this account. Virgin Money Defined Access Isa pays 1.26% and accepts transfers.
On tax-free cash Isas, Virgin Money's offers the best one-year deal at 1.3% fixed for a year. For two years you can earn 1.4% with Leeds Building Society or Shawbrook Bank.
This article was originally written for our sister magazine, Money Observer.
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.
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.