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Five minute finance: Savings

Five minute finance: Savings

Category: Savings

Updated: 25/01/2010
First Published: 25/01/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
This week sees inflation jump from 1.9% to 2.9% meaning that a standard rate tax payer now has to earn at least 3.63% to break even, while a higher rate tax payer has to earn at least 4.81%. A level that for the first time ever, no variable rate account on the market can beat and one only a few fixed rate deals can achieve.

The only positive news for savers this week is that the 2010 ISA season has really started to gather pace with a number of provider launching new deals. In contrast to other types of savings account where rates are now falling, ISAs rates are slowly increasing as providers look to attract savers' tax free allowance.

For the first time since their launch in 1999, the best buy ISA rate is below that offered on standard savings accounts. During 2009, ISAs did not really benefit from providers' demands on savers' money as only a restricted amount could be invested. However, once tax is taken into account, ISA rates still hold their own.

The majority of the new ISA deals being launched are fixed rate deals requiring between a one and three year commitment. This is a trend that is likely to continue in the weeks ahead as providers look to tie savers money in by attracting them with more competitive rates than those available on easy access ISAs.

Build up your ISA

Newcastle Building Society has just launched its Balance Builder ISA paying 3.40%, which includes a conditional bonus of 1.40%. In order to qualify for the bonus, saver must make at least nine monthly contributions of between £100 and £500 into the account over a 12 month period. The account permits transfers in, so savers can move previous years' tax free allowances.

New ISA from the Post Office

The Post Office has just launched a new issue of its Fixed Rate Cash ISA paying 3.00%. Savers can invest from £500 into the ISA, which accepts transfers in. However, further additions are not permitted after the initial investment. The ISA has a one year term and access is available on closure only during the term, subject to a loss of 90 days' interest.

Fix with Leeds

Savers looking to fix the rate they receive on their ISA allowance for three years are being offered a rate of 3.50% from Leeds Building Society. The account is operated in branch or by post and accepts transfer in. The account matures on 28 February 2013 and savers can access up to 25% of their initial investment penalty free. Further withdrawals will be subject to a loss of 120 days' interest.

Santander takes zero further

Following on from its recently launched Zero Current Account, Santander has now relaunched its Zero Credit Card. The card offers 0% on balance transfers for 12 months, with no balance transfer fee payable for existing mortgage and current account customers (3% fee payable for new customers). The card also offers 0% for three months on new purchases and makes no charge for using the card abroad or making cash withdrawals. The standard APR on the card is 18.9%.

Top bond rates

The Progressive Building Society has just launched a range of new bonds, paying rates just below the market leaders. Savers can opt for to commit funds for one, two, three or five years paying 3.25%, 4.10%, 4.25% and 5.00% respectively. Saver can invest between £500 and £1 million into the bonds, with further additions permitted whilst the bonds remain open, but access to funds is not permitted during the term.

Find the best savings accounts for you - Compare fixed rate cash ISAs

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.