Savings update: find out which banks have cut their savings rates
Banks and building societies have been busy cutting rates since the Bank of England cut base rate to 0.25% earlier this month.
On easy-access taxable deals French-owned RCI Bank Freedom account has cut its rate from 1.45% before tax (1.16% after tax) to 1.2% (0.96%).
It still offers the top rate but with this account you are covered by the European compensation scheme which gives €100,000 (£86,000) worth of cover if the bank goes bust. For more on this read our article How safe is your bank?
Shawbrook pays 1.1% (0.88%) after cutting its rate from 1.25% (1%) last week.
Top rates on the high street
On the high street the top rate is 1.16% (0.93%) from Virgin Money Defined Access as long as you make no more than three withdrawals a year.
Virgin Money’s new Manchester United Red Devils account pays 1.05% (0.84%) with no withdrawal restrictions.
On tax-free cash Isas new savers can earn 1.1% with Coventry Building Society easy-access account while the best one-year fixed rate deal comes from Shawbrook Bank at 1.3%. For two years Paragon Bank pays 1.35%.
This article was originally written for our sister publication, 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.