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This week Bank of London and The Middle East (BLME) increased the rate on its 90-day notice account. 90 Day Notice Account (Issue 5) pays an expected profit rate of 0.65% gross quarterly. This account requires a £10,000 minimum deposit to open. It allows further additions and withdrawals can be made subject to 90 days’ notice and must be from
a minimum of £1,000. The
account can only be opened
and managed online.

Robin Squirrel

New short-term bonds

Tesco Bank launched a 15-month and two-year fixed rate bond this week. The 15-month version of its Fixed Rate Saver pays 0.40% gross on anniversary and the two-year version pays 0.50% gross on anniversary. Both options require a £2,000 minimum deposit to open. They do not allow further additions or withdrawals. These bonds can be opened by phone or online but must be managed by phone. For those looking to supplement their income there are versions of both bonds that pay interest monthly at the same gross rate.

At the same time, Tesco Bank increased the rates on its one three and five-year fixed rate bonds. The one-year version of its Fixed Rate Saver pays 0.35% gross, the three-year version pays 0.55% gross and the five-year version pays 0.75% gross. All versions pay interest on anniversary and require a £2,000 minimum deposit to open. These bonds do not permit further additions or withdrawals. They can be opened by phone or online but can only be managed by phone. For income-seekers there are versions of all these bonds that pay interest monthly at the same gross rate.

Competitive bonds rates rise

Bank of London and The Middle East (BLME) increased the rates on its one-year and 18-month fixed rate bonds this week, resulting in both bonds offering competitive rates for their terms. The one-year version of its Premier Deposit Account pays an expected profit rate of 0.90% gross on maturity and the 18-month version pays an expected profit rate of 0.95% gross on anniversary. Both bonds require a £1,000 minimum deposit to open, as well as a BLME transfer account to hold funds pending investment. These bonds do not allow further additions or withdrawals. They must be opened online and can only be managed by post.

Competitive ISA rate rise

This week, Cynergy Bank changed the issue number and increased the rate on its easy access ISA resulting it paying a highly competitive rate for its term. Online ISA (Issue 14) pays 0.54% gross yearly on a £1 opening minimum deposit. This ISA requires a Cynergy Bank Authenticator App or Digipass to open and operate the account. It allows further additions and withdrawals. Transfers in from cash ISAs are permitted on account opening only and there is no penalty for transfers out. The ISA must be opened and managed online.

At the same time, Cynergy Bank increased the rates on its one, two and three-year fixed rate ISAs. The one-year version of its Fixed Rate Cash ISA pays 0.55% gross and Loyalty

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Junior ISAs

Junior ISAs (JISAs) are a great way for parents, family and friends to save for a child’s future tax-free. Up to £9,000 can be contributed to a JISA in the current tax year and it is also possible to transfer a Child Trust Fund into a JISA.

One of the top-paying cash JISAs on the market this week is from Bath Building Society with its Junior Cash ISA paying 2.50% gross yearly. To open this JISA, a minimum deposit of £1 is needed. It is available to those aged 17 and under. Further additions up to the maximum JISA allowance for the tax year are permitted. Withdrawals are not allowed. There is no penalty for transfers out and transfers in are accepted. This JISA can be opened in branch, by post and online and then managed in branch and by post.

Fixed Rate Cash ISA pays 0.56% gross, the two-year version of its Fixed Rate Cash ISA pays 0.80% gross and Loyalty Fixed Rate Cash ISA pays 0.81% gross, and the three-year version of its Fixed Rate Cash ISA pays 0.95% gross and Loyalty Fixed Rate Cash ISA pays 0.96% gross. 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 and all options require a Cynergy Bank Authenticator App or Digipass to use online banking. These ISAs allow further additions from a minimum of £100 but a variable rate of interest will be paid. Earlier access is allowed subject to 180 days’ loss of interest penalty. These ISAs accept transfers in from cash ISAs. Transfers out are permitted subject to the same interest-loss penalty as earlier access. They must be opened online but can then be managed by post, by phone and online.

Chart-topping notice account

Secure Trust Bank increased the rate on its 120-day notice account this week, resulting in it topping the chart for its notice term. 120 Day Notice Account pays 0.75% gross quarterly on a £1,000 minimum opening deposit. Further additions are allowed from a minimum of £1,000. Withdrawals are restricted to four interest withdrawals per annum and three capital withdrawals per annum on 120 days’ notice. The account must be opened online but can be managed by phone and online.

Two-year bond rate rise

Hodge Bank increased the rate on its two-year fixed rate bond this week. 2 Year Fixed Rate Bond pays 1.10% gross on anniversary on a £1,000 minimum opening deposit. This bond allows further additions within 10 working days of the account opening. Withdrawals are not permitted. It must be opened online but can then be managed by phone and online. For those looking to supplement their income there is a version of this bond that pays interest monthly at a slightly lower gross rate of 1.09%.

ISA rates increased

This week, Close Brothers Savings increased the rates on its two and three-year fixed rate ISAs. 2 Year Fixed Rate Cash ISA pays 0.76% gross and 3 Year Fixed Rate Cash ISA pays 0.86% gross. Both ISAs pay interest on anniversary and require a £10,000 minimum deposit to open. They allow further additions within 10 days of account opening. Earlier access is permitted on closure only and subject to 150 days’ loss of interest on the two-year version and 270 days’ loss of interest on the three-year option. Both ISAs accept transfers in, however, transfer instructions must be received within 10 days of the account opening. Transfers out are subject to the same interest-loss penalty as earlier access. These ISAs can only be opened online but can then be managed by post, by phone and online.

At the same time, Close Brothers Savings increased the rate on its 95-day notice account. 95 Day Notice Account (Issue 10) pays 0.67% gross yearly on a £10,000 minimum opening deposit. This account allows both further additions and withdrawals. It must be opened online but can be managed by post, by phone and online.

Bonds rates increased

Vanquis Bank Savings increased the rate on its two, three, four and five-year fixed rate bonds. The two-year version of its Vanquis Bank Savings pays 1.01% gross, the three-year option pays 1.11% gross, the four-year option pays 1.15% gross and the five-year version pays 1.46% gross. All versions pay interest on anniversary and require a £1,000 minimum deposit to open. They do not permit further additions or withdrawals. These bonds can only be opened online but can then be managed by post, by phone and online. For those looking to supplement their income there are versions of these bonds that pay interest monthly at the same gross rate on the two-year option and a slightly lower rate of 1.10%, 1.14% and 1.45% respectively on the three, four and five-year options.

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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.

How does the Personal Savings Allowance work when it comes to joint accounts?

In the case of joint accounts, both account holders will receive a Personal Savings Allowance, with the interest earned being split equally between the joint account holders and counting towards their respective allowances.

So if you are both basic rate taxpayers, you will each be entitled to earn up to £1,000 in interest tax-free. Even if you are in different tax brackets, the interest will still be divided equally between you – for example, if the joint account paid interest of £1,200 in one year and one account holder was a higher rate taxpayer, their entire £500 allowance would be used up and £100 of their interest would be taxable; if the other account holder was a basic rate taxpayer, then they would have no tax to pay and a further £400 allowance remaining.

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 0.17%
Notice 0.41%
Cash ISA 0.42%
1 Year Fixed Rate Bond 0.51%
2 Year Fixed Rate Bond 0.59%
3 Year Fixed Rate Bond 0.76%
4 Year Fixed Rate Bond 0.83%
5 Year Fixed Rate Bond 1.01%
22 June 2021

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Wizard Squirrel

Alternative sources of income

The competitive lifetime mortgage rates during June revealed

Homeowners looking to boost their income during retirement can consider unlocking equity they have built up in their homes. Two of the most popular ways to do this are by either selling the property and moving to a smaller, cheaper home, or by using equity release, which will allow you to stay in your home and borrow using your equity.

Over the last few years equity release has become more popular and the market has responded by increasing the amount of plans available to homeowners. This increase in plans has resulted in more flexibility available to borrowers, with drawdown a common feature on many equity release plans today, along with the ability to make partial repayments or interest repayments.

As well as this, the increase in deals has resulted in equity release rates becoming more competitive in recent years.

This month, for example, one of the most competitive rates on a lifetime mortgage plan available at minimum 30% loan-to-value (LTV) and which does not charge a fee was 3.11% (3.2% APR) from Legal & General Home Finance with its Flexible Orange and Optional Payment Orange plans. Also offering a competitive rate at this LTV in June was More 2 Life, which offers 3.12% (3.2% APR) on its Capital Choice Superlite Drawdown 3.

Meanwhile, one of the most competitive deals at a minimum 40% LTV which does not charge a fee was 3.75% (3.8% APR). This rate is available on More 2 Life’s Capital Choice Max 2 Drawdown. Legal & General Home Finance also had a competitive rate of 3.98% (4.1% APR) during June with its Flexible Indigo and Optional Payment Indigo plans.

Despite this increase in flexibility and the competitive rates available, borrowing through equity release can still have a long-term impact on finances, especially on the inheritance you leave behind. As such, if you are thinking about borrowing though equity release you should speak to an individual financial advisor who will be able to discuss other options available to you and whether equity release is the best choice for you personal financial circumstances.

More information about equity release can be found reading our guide to equity release. To get an idea of some of the most competitive rates available on equity release deals this month take a look at our best lifetime mortgage rates for June round up.

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