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| Cash Isa rates improve as Santander launches new range | Cash Isa rates improve as Santander launches new range |
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| Savings rates have taken a hammering ever since the Bank of England slashed the base rate to 0.5% four years ago this week, and the government's Funding for Lending scheme has arguably made things worse. But are we now starting to see some green shoots of hope for long-suffering savers? | Savings rates have taken a hammering ever since the Bank of England slashed the base rate to 0.5% four years ago this week, and the government's Funding for Lending scheme has arguably made things worse. But are we now starting to see some green shoots of hope for long-suffering savers? |
| On Monday, Santander will launch a range of cash Isas, including an easy-access account paying 2.5% for 12 months, and a two-year fixed rate paying up to 3%. Its move comes days after Barclays and HSBC launched Isas paying up to 2.3% and up to 2.75% respectively. Some have strings attached, but don't stack up too badly against the current overall best-buy 2.8% rate from Coventry building society. | On Monday, Santander will launch a range of cash Isas, including an easy-access account paying 2.5% for 12 months, and a two-year fixed rate paying up to 3%. Its move comes days after Barclays and HSBC launched Isas paying up to 2.3% and up to 2.75% respectively. Some have strings attached, but don't stack up too badly against the current overall best-buy 2.8% rate from Coventry building society. |
| At the same time, the Halifax has announced a boost to its monthly prize draw, with six top prizes of £250,000 up for grabs in May and June, in a bid to encourage more people to use their full cash Isa allowance. | At the same time, the Halifax has announced a boost to its monthly prize draw, with six top prizes of £250,000 up for grabs in May and June, in a bid to encourage more people to use their full cash Isa allowance. |
| Meanwhile, First Direct current account holders can get an impressive 6% fixed for a year if they sign up for the bank's new Regular Saver account, where you can save between £25 and £300 a month for 12 months. If you stashed away the maximum, you would receive £117 gross interest. Alternatively, you can enjoy a 5% return for 12 months, and thereby earn up to £125 interest over the period, if you're prepared to sign up for Nationwide's FlexDirect current account. | Meanwhile, First Direct current account holders can get an impressive 6% fixed for a year if they sign up for the bank's new Regular Saver account, where you can save between £25 and £300 a month for 12 months. If you stashed away the maximum, you would receive £117 gross interest. Alternatively, you can enjoy a 5% return for 12 months, and thereby earn up to £125 interest over the period, if you're prepared to sign up for Nationwide's FlexDirect current account. |
| The new rates represent a much-needed boost for savers, who have been the biggest losers from the Funding for Lending scheme launched last August. This was designed to help lenders offer cheaper loans to homebuyers and businesses, but those trying to put some money aside for the future are paying a high price. Since August 2012, the average interest paid on a cash Isa has fallen from 2.5% to 1.8%, while some of the deals from the major high street names have fallen even further. | The new rates represent a much-needed boost for savers, who have been the biggest losers from the Funding for Lending scheme launched last August. This was designed to help lenders offer cheaper loans to homebuyers and businesses, but those trying to put some money aside for the future are paying a high price. Since August 2012, the average interest paid on a cash Isa has fallen from 2.5% to 1.8%, while some of the deals from the major high street names have fallen even further. |
| Santander's new products include an easy-access account called Direct Isa Saver, which offers a variable rate of 2.5% for 12 months. However, the minimum opening balance is £2,500. Santander is also bringing back its Major Isa, which is a two-year fixed-rate account paying 2.8%, with savers getting an extra 0.1% if Rory McIlroy – one of the bank's brand ambassadors – wins an eligible golf major championship in the next two years. | Santander's new products include an easy-access account called Direct Isa Saver, which offers a variable rate of 2.5% for 12 months. However, the minimum opening balance is £2,500. Santander is also bringing back its Major Isa, which is a two-year fixed-rate account paying 2.8%, with savers getting an extra 0.1% if Rory McIlroy – one of the bank's brand ambassadors – wins an eligible golf major championship in the next two years. |
| There is also a version paying a slightly higher rate – 3%, plus the possibility of an extra 0.1% – that is only available to holders of its 123 current account or 123 cashback credit card. All three Isas accept new money and transfers in of existing Isa cash, including existing Santander Isas. | There is also a version paying a slightly higher rate – 3%, plus the possibility of an extra 0.1% – that is only available to holders of its 123 current account or 123 cashback credit card. All three Isas accept new money and transfers in of existing Isa cash, including existing Santander Isas. |
| Last week, Barclays launched the Instant Cash Isa and the 3 Year Flexible Cash Isa, both of which let savers transfer in money from other Isas held with Barclays and other providers. | Last week, Barclays launched the Instant Cash Isa and the 3 Year Flexible Cash Isa, both of which let savers transfer in money from other Isas held with Barclays and other providers. |
| The former is an instant access account paying 2.1% on balances of £1 to £14,999; 2.2% from £15,000 to £29,999; and 2.3% above £30,000. However, these rates are boosted by an introductory bonus of 0.8% that lasts for 12 months. The three-year Isa is a fixed-rate product, not boosted by a temporary bonus. It allows you access to some of your money – you can make up to three withdrawals during the term, each of up to 10% of the current balance. | The former is an instant access account paying 2.1% on balances of £1 to £14,999; 2.2% from £15,000 to £29,999; and 2.3% above £30,000. However, these rates are boosted by an introductory bonus of 0.8% that lasts for 12 months. The three-year Isa is a fixed-rate product, not boosted by a temporary bonus. It allows you access to some of your money – you can make up to three withdrawals during the term, each of up to 10% of the current balance. |
| Last Monday, HSBC launched new deals, though its cash Isas are only available to current account holders. If you are a Premier account holder, its variable rate Isa pays 2.75% on balances over £15,000, and 2.25% below, while for Advance current account customers, the rates are 2.15% and 1.65% respectively. Standard current account holders will receive 1.7% above £15,000 and 1.6% below. First Direct's Isa, available to current account customers, pays between 0.5% and 3%. | Last Monday, HSBC launched new deals, though its cash Isas are only available to current account holders. If you are a Premier account holder, its variable rate Isa pays 2.75% on balances over £15,000, and 2.25% below, while for Advance current account customers, the rates are 2.15% and 1.65% respectively. Standard current account holders will receive 1.7% above £15,000 and 1.6% below. First Direct's Isa, available to current account customers, pays between 0.5% and 3%. |
| In late 2011 the Halifax started a free monthly prize draw for customers with balances of £5,000 or more in any of its savings accounts, and this week it announced a "super draw", with three top prizes of £250,000 in both May and June. To enter the May draw, customers need to have £5,000 in their savings for the whole of April, providing an incentive to savers who have not yet used their full 2012-13 cash Isa allowance of £5,640 to add to their tax free savings before the end of March. | In late 2011 the Halifax started a free monthly prize draw for customers with balances of £5,000 or more in any of its savings accounts, and this week it announced a "super draw", with three top prizes of £250,000 in both May and June. To enter the May draw, customers need to have £5,000 in their savings for the whole of April, providing an incentive to savers who have not yet used their full 2012-13 cash Isa allowance of £5,640 to add to their tax free savings before the end of March. |
| Some people will have built up large sums in cash Isas since 1999, when they were launched, and in many cases will be earning paltry amounts. Many savers are unaware they can transfer their savings while retaining the tax-free advantages. | Some people will have built up large sums in cash Isas since 1999, when they were launched, and in many cases will be earning paltry amounts. Many savers are unaware they can transfer their savings while retaining the tax-free advantages. |
| One provider playing fair is Coventry building society, which has announced it is increasing the rate on all existing variable cash Isas to 2.5%. The move takes effect on 6 April and means that from that date, none of the Coventry's 250,000 cash Isa customers will earn less than that amount. Of its current offerings, the society's 60-Day Notice Isa is a best-buy, offering a rate of 2.8%, which includes a 0.6% bonus for the first year. You can invest from £1 up to £5,640, and penalty-free withdrawals can be made with 60 days notice. | One provider playing fair is Coventry building society, which has announced it is increasing the rate on all existing variable cash Isas to 2.5%. The move takes effect on 6 April and means that from that date, none of the Coventry's 250,000 cash Isa customers will earn less than that amount. Of its current offerings, the society's 60-Day Notice Isa is a best-buy, offering a rate of 2.8%, which includes a 0.6% bonus for the first year. You can invest from £1 up to £5,640, and penalty-free withdrawals can be made with 60 days notice. |
| Even if you are a taxpayer who can't afford to tie up money for a long period, it still pays to use an instant/easy access cash Isa because you won't be taxed on the interest. Fixed-rate Isas typically pay the best, but you need to be fairly certain you won't need the cash during the fixed term. | Even if you are a taxpayer who can't afford to tie up money for a long period, it still pays to use an instant/easy access cash Isa because you won't be taxed on the interest. Fixed-rate Isas typically pay the best, but you need to be fairly certain you won't need the cash during the fixed term. |
| Virgin Money has launched a fixed-rate Isa paying 2.75% annually, fixed for five years, available in branches, online and by post. It accepts transfers in of previous years cash Isa money. Withdrawals are allowed during the fixed-rate period, but you will pay a charge equivalent to 180 days' interest. | Virgin Money has launched a fixed-rate Isa paying 2.75% annually, fixed for five years, available in branches, online and by post. It accepts transfers in of previous years cash Isa money. Withdrawals are allowed during the fixed-rate period, but you will pay a charge equivalent to 180 days' interest. |
| Top savings accounts | Top savings accounts |
| Manchester BS | Manchester BS |
| West Brom BS | West Brom BS |
| GE Capital Direct | |
| Powered by MoneySupermarket for the Guardian | Powered by MoneySupermarket for the Guardian |