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Savings account deals of the week: 6 April 2016

Personal savings allowance introduced today

Savings accounts may become more appealing for basic and higher-rate taxpayers

The new personal savings allowance being introduced today may make traditional savings accounts more appealing for millions of people. 

From today, basic-rate taxpayers will have no tax to pay on the first £1,000 of interest they earn in a single tax year. Higher-rate taxpayers will have no tax to pay on the first £500. 

At current rates, this means it’s now possible to deposit tens of thousands of pounds in a traditional savings account without paying tax on the interest this year.    

Recent Which? research found that many ordinary fixed-rate savings deals were more competitive than the equivalent Isa deals, meaning Isas may no longer be the first port of call for savers. 

Here, we highlight some of the best accounts outside of Isas to consider putting your cash savings.

Best rate savings accounts 

If you’re keen to find out more about any of the deals, we’ve also included links to Which? Money Compare, where you’ll find more details about each savings account. 

We have excluded savings accounts with certain qualifying conditions, restrictions on withdrawals or bonus rates which drop after a certain period. 

Instant-access savings account 

Top of the table for instant-access savings accounts is RCI Bank, offering 1.45% AER on deposits above £100. This account can only be opened and operated online. Click on the link to see more about the RCI Bank Freedom Savings Account.

Notice savings account (up to 30 days)

Notice savings accounts once paid a higher rate for locking up your money than instant-access accounts, but at the moment there aren’t any paying more than the top instant-access savings rate.

Melton Mowbray Building Society offers the highest rate in our table, paying 1.31% AER on initial deposits of £1,000. This account can only be opened and operated online and requires 30 days’ notice before you can access your money. 

Click on the link to see more about the Melton Mowbray Notice Account.

One-year fixed-rate savings account

Currently topping the one-year fixed-rate savings tables is Union Bank of India, paying 2.15% AER. You’ll need a deposit of at least £1,000 to qualify for the account. Click on the link to see more about the Union Bank of India 1-year Fixed Rate Account.

Two-year fixed-rate savings account

Al Rayan Bank offers the best rate in our table in this category, paying an expected profit rate of 2.78% AER from initial deposits of £1,000. Click on the link to see more about the Al Rayan Bank 2-year Fixed Rate Account.

Three-year fixed-rate savings account

Al Rayan Bank offers the best rate in our table in this category, paying an expected profit rate of 2.88% AER from initial deposits of £1,000. Click on the link to see more about the Al Rayan Bank 3-year Fixed Rate Account.

Four-year fixed-rate savings account

Currently topping the four-year fixed-rate savings tables is Union Bank of India, paying 2.8% AER. You’ll need a deposit of at least £1,000 to qualify for the account. Click on the link to see more about the Union Bank of India 4-year Fixed Rate Account.

Five-year fixed-rate savings account

Union Bank of India offers the best rate in our table in this category, paying 3% AER. Click on the link to see more about the Union Bank of India 5-year Fixed Rate Account.

How do cash Isas fare?

Although the personal savings allowance seems generous while interest rates are low, this may not be the case when they start to rise.

Isas continue to provide a tax-free shelter for your savings, regardless of how much money you accumulate over time. We think they remain an attractive option, particularly if you’re a higher-rate taxpayer or are likely to become one in the future.

The Which? Money Compare Isa tables let you search hundreds of savings accounts and Isas from providers large and small to find a great savings rate based on quality of service as well as cost and benefits.

Which? Money Compare table: Cash Isas – compare hundreds of deals

More on this… 

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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