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CASH ISAs
AER £1K £5K
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Notice Variable - - Search
1 Year Fixed - - Search
2 Year Fixed - - Search
3 Year Fixed - - Search
4 Year Fixed - - Search
5 Year Fixed - - Search
VARIABLE RATES
AER £10K £50K
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Less than 1 Month - - Search
Less than 3 Months - - Search
3 Months + - - Search
FIXED RATES
AER £10K £50K
Less than 1 Year - - Search
1 Year - - Search
2 Year - - Search
3 Year - - Search
4 Year - - Search
5 Year + - - Search
OFFSHORE ACCOUNTS
AER £10K £50K
Variable - - Search
Fixed - - Search
BUSINESSES Charities, Clubs,
Pension Funds, Client A/cs etc
AER £10K £50K
Variable - - Search
Fixed - - Search
REGULAR SAVINGS
AER £25pm £100pm
Variable - - Search
Fixed - - Search
ISA - - Search
Help to Buy ISA - - Search
CHILDRENS ACCOUNTS
AER £100 £1K
Variable - - Search
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JISA - - Search

Leading the way if you want to secure a regular income from an easy access account is RCI Bank UK. From a minimum deposit of £100, the online-only Freedom Savings Account pays an annual rate of 1.29% on a monthly basis. The only restriction on additional deposits and withdrawals is that they must be made via a nominated account. Savings of up to €100,000 per person with RCI Bank UK are protected by the French Depositor Compensation Scheme.

Paying the market-leading return if you are happy to wait a short time before accessing your funds is Aldermore. From a minimum deposit of £1,000, 30 Day Notice Issue 7 pays 1.05% yearly. Additional deposits are welcome and unlimited withdrawals are allowed, but there is no option to access funds early, with 30
days’ notice always having to
be served on this purely
internet-based account.

Robin Squirrel

Best easy access ISA

Improving rates and now paying the market-leading return among easy access ISAs that are open to all is Al Rayan Bank. From a minimum deposit of £50, Instant Access Cash ISA pays an expected annual profit rate of 1.35% on a monthly basis. Additional deposits, transfers in and withdrawals are allowed at any time, while transfers out are penalty-free. This ISA can be opened and operated online, in branch, by post, over the phone and by mobile app.

Four-year bond goes top

Raising rates and now the market-leader if you want a four-year fixed rate bond is Vanquis Bank. Requiring a minimum deposit of £1,000, Vanquis Bank Savings now pays 2.52% yearly, or 2.49% per annum on a monthly basis, if you’d prefer to secure a regular income instead. Neither additional deposits nor early access to funds are allowed on this bond, which must be opened online, but can then be operated by post and over the phone as well.

Bond nears best

Increasing rates and now paying the second-best return among one-year fixed rate bonds is Milestone Savings. Requiring a minimum deposit of £1,000, Fixed Term Deposit now pays an expected profit rate of 1.90% on maturity. This online-only bond does not allow additional deposits or early access to funds.

Fixed rate nears top

Raising rates and nearing the market-leaders if you want a short-term bond is United Trust Bank. From a minimum deposit of £5,000, UTB 1 Year Bond now pays 1.85% on maturity. Additional deposits are not allowed and early access to funds is not possible on this bond, which must be opened online and then operated in branch or by post.

New two-year fix

New this week and offering the joint second-best return if you want a two-year bond is Secure Trust Bank. Requiring a minimum deposit of £1,000, 2 Year Fixed Rate Bond (29.4.20) pays 2.10% yearly, while its one-year counterpart pays a highly competitive 1.83% too. Additional deposits are allowed until the end of April, but it is not possible to access funds early prior to maturity. The bonds must be opened online, but can then be managed over the phone as well.

Looking for an Easy Access Cash ISA? See Latest Top Rates in left hand column
Savers Friend In Focus

Junior ISAs

Junior ISAs allow parents, family and friends to save for a child’s future tax-free. Up to £4,260 can be contributed to a Junior ISA in the current tax year and it is also now possible to transfer a Child Trust Fund into a Junior ISA.

The top-paying cash JISA with no opening restrictions comes from Coventry BS. Junior Cash ISA (1) pays 3.50% yearly from an opening balance of just £1, and is available to those up to the age of 17. There is no penalty for transferring out and transfers in from other providers are welcome. The account can be opened and operated in branch, and by post.

Bond climbs chart

Improving rates and rising up the short-term bond charts as a result is Zenith Bank (UK) Ltd. From a minimum deposit of £1,000, 2 Year Fixed Term Deposit now pays 2.03% yearly. Neither additional deposits nor early access to funds are allowed on this bond, which must be opened online and then operated by post.

Fixed rates on the up

Raising rates and now highly competitive among fixed rates of various terms is Hodge Bank. From a minimum deposit of £1,000, 1 Year Fixed Rate Account now pays 1.80% on maturity, while its three-year counterpart rises to 2.25% yearly. Additional deposits are welcome for 10 working days if the account is opened online, but early access to funds is not allowed.

At the same time, Hodge Bank raised the rate on its short-term ISA, edging it closer to the market-leaders as a result. Requiring a minimum deposit of £1,000, 1 Year Fixed Rate Cash ISA pays 1.40% on maturity. Transfers in are welcome, but additional deposits are not allowed. The only way to access funds early is by closing the account and foregoing 90 days’ interest, a penalty which also applies if transferring out.

Both the bonds and the ISA can be opened by post or online and then managed by post and over the phone. For income-seekers, versions of both that pay slightly reduced annual rates on a monthly basis are available too.

Easy access appeals

New this week and offering a highly competitive return among easy access accounts is Sainsbury’s Bank. From a minimum deposit of £1, Defined Access Saver – Issue 3 pays 0.50% yearly, but this rises to a far more appealing 1.20% yearly on balances of £1,000 and over. Additional deposits are allowed, but it should be noted that a lower rate of interest will be paid if more than three withdrawals are made in a 12-month period. The account can be opened and operated over the phone and online.

Five-year ISA leads way

Leading the way if you want a long-term fixed rate ISA is United Bank UK. Requiring a minimum deposit of £2,000, 5 Year Fixed Rate Cash ISA pays 2.65% yearly. Transfers in are welcome from cash ISAs, but additional deposits are not allowed, and the only way to access funds early is by closing the account and losing 365 days’ interest. The same penalty applies if transferring away from this ISA, which can be opened and operated in branch, and by post.

Best for saving regularly

Currently offering a joint market-leading return among fixed rate regular savings accounts is first direct. Paying 5.00% for one year, Regular Saver requires a payment of between £25 and £300 to be made each month for a year. Withdrawals are not allowed on this account, which is only available to first direct 1st account customers. The account can be opened over the phone or online, but must then be managed over the phone.

Chart-topping children’s account

The top-paying instant access children’s account without opening restrictions is from HSBC. Requiring a minimum deposit of £10, MySavings pays an annual variable rate of 2.72% on a monthly basis on deposits of up to £3,000, before dropping to 0.50% on deposits exceeding this. The account is available to children aged between seven and 17 years, and additional deposits are allowed at any time, but the signature of a parent or guardian is required for withdrawals of £50 or more for those under the age of 11. The account must be opened in branch and can then be managed over the phone, online and by mobile app as well.

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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.

Why is it that ISAs seem to be paying less than similar length fixed rate bonds?

There are a couple of reasons for the difference between rates. The first is that the best bond rates are typically being offered by challenger banks, who are new to the market and trying to establish themselves. As new entrants, these providers don’t usually offer ISA products straight away, as these typically involve more administration. If you were to look at just the banks that do offer both bonds and ISAs, it would become apparent that both rates tend to be pretty much on a par with each other.

This leads onto the second potential reason why ISA rates are lower, which is that by having to allow transfers out, banks must price into their ISA rates the chance that they may lose the money from their coffers before the term ends. With fixed rate bonds, providers can mitigate against this by adding restrictions that prevent early access to funds.

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 0.49%
Notice 0.79%
Cash ISA 1.19%
1 Year Fixed Rate Bond 1.25%
2 Year Fixed Rate Bond 1.51%
3 Year Fixed Rate Bond 1.70%
4 Year Fixed Rate Bond 1.97%
5 Year Fixed Rate Bond 2.08%
24 April 2018

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Wizard Squirrel

Alternative sources of income

Property withdrawals double in two years

The amount of housing equity that older homeowners are withdrawing from their properties has more than doubled in the past two years, as the importance of equity release as a means of supplementing income in retirement continues to grow. According to the latest Equity Release Council data, nearly £10m of housing wealth was withdrawn each day in the first three months of the year, compared to £4.3m in the same period during 2016. A similar trend is also apparent when looking at new customer numbers during the first three months of the year, which have almost doubled from 5,175 to 10,195 over the last two years.

This impressive increase in demand has also been met by an increase in product options available to consumers, which jumped from 69 in January 2017 to 86 a year later. In turn, the heightened competition has driven greater innovation in the sector, with new flexibilities being introduced. As a result, over two-thirds (70%) of product options now offer consumers the choice to make ad-hoc, penalty-free, voluntary or partial repayments of their loan.

As for the type of products that are proving popular, around two-thirds of new customers chose the drawdown plan option, which typically sees smaller amounts of equity withdrawn initially compared with lump sum plans, with an extra amount reserved for future use. Importantly, this limits the interest owed, as it is only charged as funds are withdrawn.

Among new drawdown customers in the first quarter of the year, the average initial instalment they took was £64,797, some 11% higher than a year previous. For the one in three new customers opting for lump sum lifetime mortgages, the average amount taken of £96,483 was broadly unchanged on the £96,340 reported 12 months earlier. Meanwhile, the number of existing drawdown customers returning to make withdrawals from their agreed reserves grew by 26% year-on-year, from 6,019 a year ago to 7,588. These returning customers made an average withdrawal of £11,453.

Commenting on the figures, Rory Joseph, director of Equity Release Mortgage Advice, said one of the biggest growth areas his advisory firm had seen was the number of people seeking to release equity in order to help their children get on the property ladder. “Plus there are a large number of existing interest-only mortgage borrowers who have come to the end of their term and need money to pay off the capital part of these loans,” he adds. “We’re also seeing individuals using equity release to pay off other debts, renovate and refurbish their homes, plus covering other retirement costs.”

Noting that equity release is an area “where advice is crucial”, Mr Joseph predicts that this is a market which, along with residential later life lending, “is only likely to grow because of underlying societal changes such as greater longevity of life, poorer pension provision, and a need to support the family”.

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