Savings update: NS&I cuts Direct Isa to 1%: where to get a better deal

6 June 2016

Rates on offer from National Savings & Investments go down from today (Monday 6 June). Its Direct Cash Isa now pays 1%, down from 1.25%, while its Income Bonds pay 1% before tax (0.75% after tax) and Direct Saver 0.8% (0.64%).

Better news comes from Virgin Money which has relaunched its Defined Access Isa at 1.26% tax-free. It puts it among the best easy-access Isa, although you are only allowed to make three withdrawals each year.

Other good deals include Coventry Building Society's Easy Access Isa 3 and Sainsbury's Bank Cash Isa, both at 1.3%. You can't transfer your existing cash Isas into the Coventry account.

On fixed rate cash Isas Britannia, a trading name at Co-op Bank, pays a top 1.4% fixed until 31 July 2017 or 1.5% until 31 July 2018.

Taxable accounts

With Tesco Bank you can earn 1.3% for one year, while other top two-year deals include Virgin Money, Leeds Building Society and Shawbrook Bank at 1.4%.

On taxable accounts the top rate on easy-access accounts at 1.45% before tax (1.16% after tax) comes from French-owned RCI Bank while Shawbrook Bank pays 1.25% (1%). Both accounts are only available online.

On taxable fixed-rate bonds RCI Bank pays a top 1.65% (1.32%). Charter Savings Bank and Swedish-owned Ikano Bank both pay 1.6% (1.28%).

For two years the best deal is 1.9 per cent (1.52 per cent) from RCI Bank, followed by 1.85 per cent (1.48 per cent) from Ikano Bank and 1.8 per cent (1.44 per cent) from Tesco Bank, Close Brothers and Paragon Bank.

See our top savings and top cash Isas articles for the latest best buys.  

This story was originally written for our sister magazine, Money Observer.

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