Savings update: shop around to find the rates above 1%
The best buys have been fairly stable over the last week - providers seem to be focused on cutting the rates for existing customers. Some will be falling to as low as 0.01%. But savers don't have to put up with this.
There are plenty of accounts that are paying over 1%, so it's vital to shop around and switch to the best account to meet your needs. Among the instant access accounts, RCI Bank's Freedom Savings Account is paying 1.2%, while Shawbrook's Easy Access Issue 6 pays 1.1%.
Better rates are available among notice accounts, with Bank and Client's 90-day Notice Account paying a market-leading 1.5%.
For some, using high interest paying current accounts may be the answer to boosting the interest earned, as they pay up to 5% AER - albeit on smaller balances, and with T&Cs that need to be adhered to otherwise you may not earn the rate of interest you are expecting.
High interest accounts
Look at TSB Bank's Classic Plus or Nationwide's Flexdirect accounts for a 5% payout, while Lloyds Bank pays 4% on its Club Lloyds account.
The one year fixed rate bond table is topped by Charter Savings Bank, paying 1.46%. For two years you can earn 1.55% from Paragon Bank.
Junior Isas offer better deals, with Coventry's Junior Cash Isa paying 3.25%, closely followed by Nationwide and Halifax's offerings on 3%.
*All information contained within this article was sourced from savingschampion.co.uk
This story was originally written for our sister publication, Money Observer.
A savings account on which the account holder is required to give a period of notice before making a withdrawal or face a penalty, usually a loss of a specific number of days’ interest or pay a fee. Notice periods of 30, 60 or 90 days are common. These accounts usually pay higher than average interest rates and require large initial deposits (£1,000 minimum) so the notice period and penalties are there to discourage withdrawals. Some of these accounts will only allow a certain number of 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.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.