Savings update: look out for this new, top-paying deal
Leeds Building Society is to launch a top-paying easy access account today (6 December). Its Limited Issue Online Saver pays 1% before tax on a minimum £5,000. It matches the rate paid by RCI Bank, which has headed the best buy tables for months.
Tesco Bank has also raised the rate on its Internet Saver to 1% but this rate is boosted for a bonus paid for the first 12 months. After that your rate drops to 0.4%.
Under new rules from city regulator the Financial Conduct Authority, which came in effect last week, banks and building societies have to write to you 14 days before your bonus runs out to warn you your rate will drop.
The new rules are not just limited to accounts with a bonus. They must also tell you of any cut they plan to make on all easy-access account you have.
- See this week's Best savings accounts
With Atom you have to run your account on your phone through its app, while with French-owned RCI Bank your money is covered by the European compensation scheme rather than our home-grown Financial Services Compensation Scheme (FSCS).
The European scheme gives you €100,000 (around £84,000) worth of cover. Swedish-owned Ikano is covered by the Swedish scheme, which gives the same £75,000 level of protection as the FSCS.
But you can't transfer your existing cash Isas into these accounts. The top deal which accepts transfers is 0.9% from Principality Building Society.
This article was originally written for our sister magazine, Money Observer.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
The Financial Services Compensation Scheme is the compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading, the FSCS may be able to pay compensation to its customers. Limits apply to how much compensation the FSCS is able to pay, and those limits vary between different types of financial products. However, to qualify for compensation, the firm you were dealing with must be authorised by the Financial Services Authority (FSA).
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.