Savings update: NS&I's Budget bond set to launch online only
National Savings & Investments will launch a three-year fixed rate bond next month at 2.2%. The Investment Guaranteed Growth Bond will be open to those aged 16 or over with a bank account and will be available online only.
You can put in between £100 and £3,000 and the bond will be on sale for 12 months. Over the full three-years, you will see a total £202.39p interest on £3,000. The actual launch date is yet to be confirmed. Read Moneywise's verdict on how competitive the new bond is likely to be.
The top one-year fixed rate bond at 1.8% comes from Atom Bank. To open an account savers must use an app on their phone or tablet. The next best deal is 1.62%, from OakNorth Bank.
On the high street, the best deal comes from the new Newcastle Building Society bond at 1.4%. For two years, you'll earn 2.1% with Atom Bank, 1.66% from OakNorth Bank and 1.65% from United Trust Bank. Currently the top three-year deals come from Atom at 2.2% and Secure Trust at 2%.
Top easy-access and fixed-rate deals
On easy-access accounts internet-based French bank RCI pays a top 1.1% on its Freedom Account. The new Online Bonus Saver account from Skipton Building Society, launching on Tuesday (14 March), will pay 1.02% including a 0.21% bonus for 12 months.
Virgin Money Defined Access Isa pays 1.01% but limits you to making three withdrawals a year. Both accept transfers from other providers. Skipton Bonus Cash Isa pays 0.9% including a 0.25% bonus for a year.
This story 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.
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.