Tesco Bank raises top-paying savings rate

23 September 2014

Tesco Bank is the latest to raise the rate on its easy access internet account to 1.4% before tax (1.12% after tax). It joins AA Savings Internet Extra 16 and Post Office Online Saver Issue 12 which both pay 1.4% (1.12%).

All three come with a short-term bonus which lasts for a year. After this the AA account, where the deposit taker is Halifax, drops to 0.5% (0.4%), while both the Tesco and Post Office account drop to 0.75% (0.6%).

Saga has launched a new version of its Telephone Saver at a slightly higher 1.5% (1.2%), available for those aged 50 and over. The rate drops to 0.4% (0.5%) after a year.

The best deal where the initial rate is not boosted by a bonus and there are no withdrawal restrictions comes from Sainsbury's Bank at 1.35% (1.08%).

On fixed rates the top one-year deal comes from Tesco at 1.85% (1.48%) and Post Office at 1.8% (1.44%). On two-year deals you can earn 2.3% (1.84%) with Kent Reliance.

Find the best cash Isa or savings account for you

Cash Isas

On cash Isas you can earn a top 1.55% tax-free on easy access accounts with both BM Savings Extra Isa 11 and Post Office Premier Isa 7. Both come with an initial bonus, but, unusually the Post Office deal runs for 18 months rather than the usual 12 months.

The best deal without a bonus comes from National Savings & Investments and GE Capital Direct, both offering 1.5%. But you cannot transfer your existing cash Isas into the National Savings account - you are limited to putting just this year's cash Isa allowance into the account.

On fixed-rate cash Isas, Post Office pays 1.7% for one year, while at Barclays you can earn 2.02% fixed for two years and have access to some of your money without losing interest. Both Skipton Building Society and AA Savings pay 2% fixed for two years.

This article was written for our sister website Money Observer

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