Savings update: Yorkshire BS launches top-paying high-street deal
Yorkshire Building Society has launched a one-year fixed-rate bond paying 2.05 per cent before tax (1.64 per cent after), available online and through its branches. It is also available through its offshoots, Barnsley, Chelsea and Norwich & Peterborough building societies.
This rate makes it the top payer in the high street and just slightly behind online bonds from Charter Savings Bank at 2.07 per cent (1.66 per cent) and Firstsave at 2.06 per cent (1.65 per cent). The Yorkshire deal also offers you the chance to take monthly interest at 2.03 per cent (1.62 per cent).
For two years you can earn a higher 2.35 per cent (1.88 per cent) with Aldermore, Harrods or RCI banks.
Easy-access accounts and cash Isas
On easy-access taxable accounts the best rate is 1.65 per cent (1.32 per cent after tax) from RCI Bank Freedom Account. With this bank you are not covered by the UK compensation scheme. If the bank goes bust, you claim from the European scheme where the maximum amount is €100,000 (around £72,000).
West Bromwich WebSave Easy Saver pays 1.55 per cent (1.25 per cent) and Virgin Money Defined Access Saver 1.51 per cent (1.21 per cent). With the Virgin account you are limited to making three withdrawals a year.
On tax-free cash Isas, the top easy access account comes from Post Office Online Cash Isa, at 1.51 per cent including a 0.86 percentage point bonus for the first 12 months.
Virgin Money Defined Access Isa is a slightly better rate at 1.56 per cent and there is no bonus on this account, but it limits you to making three withdrawals a year.
The best deal with no bonus and no withdrawal restrictions comes from Coventry Building Society, which raised the rate for both new and existing savers to 1.5 per cent last week. It will also accept transfers from other providers.
Top fixed-rate cash Isa deals come from Virgin Money at 1.81 per cent and Shawbrook Bank at 1.8 per cent fixed for a year. For two years Virgin Money pays 2.06 per cent.
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.