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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.
How can I quickly tell whether a bank is a UK bank or a foreign bank, and whether they are covered by depositor protection?
In the guides section on Savers Friend, there is a guide entitled ‘Who owns whom?’, which lists all the banks and building societies and provides the information you are looking for, including the country where their banking licence is held, the compensation scheme they fall under, and the other banks and building societies that operate under the same banking licence.
In the charts, it is also possible to see information regarding depositor protection by hovering over the umbrella icon or clicking ‘i’ under the ‘Further info’ heading. All accounts on Savers Friend offer savers some protection, either from the UK-based Financial Services Compensation Scheme (FSCS) or through an overseas protection scheme.
This week's
average rates
| No Notice | 0.24% |
| Notice | 0.56% |
| Cash ISA | 0.56% |
| 1 Year Fixed Rate Bond | 0.69% |
| 2 Year Fixed Rate Bond | 0.77% |
| 3 Year Fixed Rate Bond | 0.92% |
| 4 Year Fixed Rate Bond | 1.03% |
| 5 Year Fixed Rate Bond | 1.11% |
| 07 July 2020 | |
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Savers can withdraw from LISAs at a lower withdrawal charge
Savers with a Lifetime ISA (LISA) wanting to withdraw funds from their account are currently able to do so at a reduced withdrawal charge than would normally be incurred on LISAs.
In order to provide extra financial support to young savers during the Coronavirus pandemic, the Government reduced the early withdrawal penalty on LISAs from 25% to 20% on 6 March 2020 and this reduction remains in effect until 5 April 2021.
The reduction in the withdrawal charge means that savers can currently withdraw funds from their LISAs for use for something other than buying their first property and will only forgo their Government bonus and not incur an additional penalty.
LISAs were first introduced into the savings market as an alternative to Help to Buy ISAs, which were withdrawn from the market last November. LISAs are only available those aged between 18-39 and have the incentive of a 25% Government bonus being added per year on deposits to a maximum of £4,000. One of the biggest drawbacks for many savers is that the money in a LISA can normally only be used for buy a first home or for retirement, and if money is withdrawn for any other reason, the 25% withdrawal charge can result in savers losing a significant amount of their savings.
As the only savings account to offer first-time buyers a 25% Government bonus, it is an attached product, but just four providers currently offer LISAs, with the top-paying accounts offering 1.25% gross yearly. But if the Government permanently reduces the withdrawal charge on LISAs, it is hoped that these products will become more popular with savers and providers alike. As Eleanor Williams, finance expert at Moneyfacts.co.uk, explained: “The purpose of a LISA account was to encourage people to save towards the long-term goals of property ownership and/or retirement. However, those savers who have found that they may need to change or delay their plans due to the recent crisis now have the option to withdraw their LISA funds at a reduced charge.
“For those without flexible access to funds, such as with an easy access savings account, and who may have seen their household income adversely impacted, this may be seen as a lifeline that could help those in need of increased cashflow. However, savers should check all the terms and conditions of their current LISA before proceeding and may need to weigh up carefully whether now is the time to draw from their savings pot.”
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