Savings update: taxable easy-access rates continue to rise

Published by Sylvia Morris on 31 May 2017.
Last updated on 31 May 2017

Rates on taxable easy-access accounts continue to edge up, with rises from both Shawbrook Bank and AA Savings, where the deposit-taker is Bank of Ireland.

Shawbrook now pays 1.05% and AA savings 1.03% on its Member Saver, open to its four million members.

You can earn 1.06% with Tesco Bank and 1.05% at Bank of Cyprus, but these rates are boosted by a bonus which lasts for 12 months before the rate drops.

RCI Bank still pays the top 1.1%.  With this French-owned bank your money is covered up to €100,000 (around £85,000) under the French scheme.  With the others, you are covered up to £85,000 by the UK Financial Services Compensation Scheme.

In the high street, the top rate is 1.05% from Virgin Money Defined Access Saver, which restricts you to making three withdrawals a year. Kent Reliance pays 1% through its limited branch network, while National Counties Building Society Branch Saver 5 pays 0.86% and Coventry Building Society Access Saver 0.85%.

On fixed rate bonds, the top one-year deal comes from Chorley Building Society at 1.58%, while in the high street Virgin Money pays 1.11%.  For two years, you can earn 1.76% with Charter Savings Bank or, in the high street, 1.21% from Virgin Money.

For tax-free Cash Isas, Coventry Building Society, Sainsbury’s Bank and Ford Money all pay a leading 0.9%. Virgin Money offers a better deal at 1.01%, but you are restricted to making three withdrawals a year on your account to earn this rate.

Bank of Cyprus pays the best one-year fixed rate at 1.13%, followed by Virgin Money at 1.11%. For two years the best deals come from Paragon Bank at 1.26% and Bank of Cyprus 1.23%.

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How on earth can rates around

How on earth can rates around 1% be trumpeted as remotely decent? Even the colossal height of 1.76% pa represents a likely compound loss of at least 1.5% against inflation over the two-year period of the relevant account. What is the point of saving up if the money you set aside today will be worth less later on? Savers are being robbed by the Bank of England's policy of flooding liquidity into the banking sector.

far better to use Zopa and

far better to use Zopa and join the P2P lending rates of 3 to 6 times these