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Coventry Building Society launched a chart-topping easy access account this week. Double Access Saver (Online) pays 1.20% gross on anniversary on a minimum opening deposit of just £1. This account allows unlimited further additions. Two penalty-free withdrawals are permitted per annum, while further withdrawals are subject to 50 days’ loss of interest. It can only be opened and managed online. For those looking to supplement their income, there is a version of this
account that pays interest
monthly at a slightly lower
gross rate.

Robin Squirrel

Fixed bonds rates increase

Aldermore increased the rates on its one, two, three, four and five-year fixed rate bonds this week, resulting in them offering competitive rates for their terms. 1 Year Fixed Rate Account pays 1.26% gross on maturity, 2 Year Fixed Rate Account pays 1.36% gross on anniversary, 3 Year Fixed Rate Account pays 1.40% gross on anniversary, 4 Year Fixed Rate Account pays 1.42% gross on anniversary, and 5 Year Fixed Rate Account pays 1.45% gross on anniversary. All bonds require a £1,000 minimum deposit to open. Further additions are allowed for 14 days from account opening. Withdrawals are not permitted. These bonds must be opened and managed online. For those looking to supplement their income, there are versions of all these bonds that pay interest monthly at a slightly lower gross rate.

Competitive bonds rates rise

This week, Bank of London and The Middle East (BLME) increased the rates on its one-year, 18-month, two, three, four, five, and seven-year fixed rate bonds. The one-year version of its Premier Deposit Account pays an expected profit rate of 1.20% gross on maturity, the 18-month version pays an expected profit rate of 1.25% gross, the two-year option pays an expected profit rate of 1.30% gross, the three-year version pays an expected profit rate of 1.45% gross, the four-year version pays an expected profit rate of 1.50% gross, the five and seven-year options both pay an expected profit rate of 1.60% gross. All bonds, except for the one-year option, pay profit on anniversary and require an opening minimum deposit of £1,000. A BLME transfer account to hold funds pending investment is also needed. Further additions and withdrawals are not permitted. These bonds must be opened online and then can only be managed by post.

Chart-topping fixed rate ISAs

Hampshire Trust Bank increased the rates on its one and two-year fixed rate ISAs this week, resulting in them topping the charts for their terms. 1 Year ISA Bond (Issue 19) pays 1.02% gross and 2 Year ISA Bond (Issue 18) pays 1.07% gross. Both ISAs pay interest on anniversary and require a minimum deposit of just £1 to open. They allow further additions within 14 days of account opening via a nominated account. Transfers in are accepted.

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Savers Friend In Focus

Business accounts

If you run a business and are looking for a home for your spare funds, many providers offer savings accounts that are open to non-personal customers.

The top-paying variable rate business savings account on the market this week is from Allica Bank. 95-Day Notice Business Savings Account (Issue 1) pays 1.10% gross on anniversary on an opening balance of £1,000. This account is only available to limited companies. Unlimited further additions are permitted. Withdrawals can be made subject to 95 days’ notice. It must be opened online and can only be managed by phone. There is also a version of this account that pays interest monthly at a slightly lower gross rate.

Transfers out are subject to 90 days’ loss of interest on the one-year option and 180 days’ loss of interest on the two-year option. These ISAs can be opened by post or online, and then managed by post, by phone, and online.

Competitive easy access ISA rate rise

Principality Building Society increased the rate on its easy access ISA this week, resulting in it offering a competitive rate. Web ISA Issue 3 pays 0.95% gross yearly on an opening minimum deposit of £1. Further additions are allowed until 5.4.21 for the 2020/21 tax year via a nominated account. Withdrawals are permitted via a nominated account. Transfers in are accepted. There is no penalty for transfers out. This ISA must be opened and managed online.

At the same time, Principality Building Society increased the rate on its easy access account, which now pays a competitive rate. Online Limited Access pays 1.05% gross yearly on a £1 opening minimum deposit. Unlimited further additions are allowed. Withdrawals are restricted to three per calendar year including closure. This account can only be opened and managed online.

New fixed rate ISAs

Cynergy Bank launched one, two, and three-year fixed rate ISAs this week. The one-year version of its Fixed Rate Cash ISA pays 0.92% gross and the one-year version of its Loyalty Fixed Rate Cash ISA pays 0.93% gross, while the two-year versions of its Fixed Rate Cash ISA and its Loyalty Fixed Rate Cash ISA pay 0.96% gross and 0.97% gross respectively, and the three-year options of these accounts pay 1.01% gross and 1.02% gross respectively. All options pay interest on anniversary and require a £500 minimum deposit to open. The loyalty ISAs are only available to existing customers of six months or more. All ISAs allow further additions subject to a minimum deposit of £100 but are paid at a variable rate. Earlier access is permitted subject to 180 days’ loss of interest. Transfers in from cash ISAs are accepted. Transfers out are subject to the same interest-loss penalty as earlier access. All ISAs can only be opened online, but can then be managed by post, by phone, and online. A Cynergy Bank Authenticator App or Digipass is required to use online banking.

Fixed bonds rates rise

This week, OakNorth Bank increased the rates on its 12, 15, 18, 24, 30, 36, 48, and 60-month fixed rate bonds. The 12-month version of its Fixed Term Deposit pays 1.23% gross, the 15-month option pays 1.25% gross, the 18-month version pays 1.27% gross, the 24-month version pays 1.31% gross, the 30-month version pays 1.33% gross, the 36-month option pays 1.34% gross, the 48-month version pays 1.35% gross, and the 60-month version pays 1.36% gross. All options pay interest on maturity and require a £1 minimum deposit to open. Further additions are allowed within 14 days of account opening. Withdrawals are not permitted. These bonds can be both opened and managed online and via mobile app.

New easy access account

This week, West Brom Building Society launched an easy access savings account. WeBSave Single Access (Issue 2) pays 0.90% gross yearly on a £1,000 minimum opening deposit. This account matures on the 30.11.21, after which it becomes either a limited access or easy access account. Unlimited further additions are allowed. Withdrawals are restricted to one per account year and a lower rate of 0.05% is paid for the remainder of the year if more than one withdrawal is made. This account can only be opened and managed online.

At the same time, West Brom Building Society launched an easy access ISA. WeBSave Single Access ISA pays 0.90% gross yearly on a minimum opening deposit of £1,000. This ISA matures on the 30.11.21 when it becomes either a limited access or easy access ISA. It allows unlimited further additions. One withdrawal is permitted per account year, if more than one withdrawal is made, a lower rate of 0.05% is paid for the remainder of the year. Transfers in are accepted. Transfers out are permitted subject to a maximum transfer out limit of £500,000. It can only be opened and managed online.

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Rachel Thrussell

Ask Rachel

Working in the financial industry for over 30 years, Rachel Thrussell is the leading independent expert on UK savings products. Her views are constantly in demand from both the industry and the press.

If I want to transfer my ISA, do I just tell my existing provider where I want it to go? And how long is it likely to take?

To get started, you actually need to contact the provider you want to transfer to. They will then ask you to complete some forms, but should then take control of the transfer process from there. As to how long it will take, HMRC says that cash ISA to cash ISA transfers must be completed within 15 business days of the instruction being received by the new ISA provider. If, for whatever reason, it isn’t completed within this time, you would be entitled to ask for a refund of lost interest. It is possible to transfer between cash and stocks & shares ISAs, including funds from previous tax years. However, when searching for a new ISA, it should be noted that not all providers accept transfers in, and not all will accept transfers in from stocks & shares ISAs.

Get your savings questions answered by Rachel by emailing rachel@saversfriend.co.uk We regret we cannot answer emails personally

This week's
average rates

How do your savings compare?
No Notice 0.24%
Notice 0.57%
Cash ISA 0.61%
1 Year Fixed Rate Bond 0.75%
2 Year Fixed Rate Bond 0.82%
3 Year Fixed Rate Bond 0.97%
4 Year Fixed Rate Bond 1.07%
5 Year Fixed Rate Bond 1.13%
22 September 2020

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Wizard Squirrel

Alternative sources of income

Long-term savers urged to be cautious despite inflation falling to 0.2%

The Consumer Price Index (CPI) figures released last week showed that during August inflation fell to a five-year low of 0.2%. Although this will be welcome news to many savers, especially as savings rates have seen a slight increase over the last few weeks, long-term savers still need to be cautious and may look to alternatives to savings accounts for getting better returns on their investments.

During 2020, the inflation rate has remained low, mainly impacted by consumer spending habits changing drastically due to lockdowns implemented to help reduce the spread of Covid-19. However, while inflation has remained low this year so far, the predicted rate of inflation for July to September 2023 is 2.2%, which if the prediction is met, would mean those locking into a five-year fixed rate bond today will have an under-inflation rate for the final two years of the account’s term.

Currently, the highest rate on a long-term fixed rate bond is Bank of London and The Middle East’s five and seven-year fixed rate bonds, which both pay an expected profit rate of 1.60% gross on anniversary.

This means that savers looking to put their money away for the long-term, may want to consider choosing a short-term account, for example a one or two-year fixed rate bond, which will enable them to withdraw their money after a shorter period and, if rates have increased, lock into a higher-paying account.

Savers wanting to put their money into a secure account can instead consider premium bonds. Although premium bonds do not offer interest on money invested, savers are instead entered into a prize draw each month that can see them winning between £25 to £1 million. There are no guarantees that premium bond holders will win money, but the more premium bonds held the higher the chances of winning. At the moment, premium bonds have a prize fund rate of 1.40% tax-free, but from November (impacting the December prize draw), this is set to be reduced to 1.00% tax-free.

Alternatively, savers willing to consider a risker investment, could choose a stocks and shares ISA instead. Investing in a stocks and shares ISA does carry the risk of losing all money invested, including the initial capital, but can result in greater returns on investments. Investing in a stocks and shares ISA should usually only be considered by those looking for a long-term investment of five years or more. In addition to this, those looking to invest in a stocks and shares ISA should be clear of the risks involved with this type of investment. For those new to investing, using an investment platform can be a good option as these platforms will normally allow investors to diversify their investments easily and can be set up with a small initial deposit and low minimum monthly deposits.

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