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Is there a savings question you've always wanted to know the answer to? Or a savings issue you've always wanted to understand? Well, now is your chance to get an answer!

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Answers to Your Questions

Teresa from Billericay asks:

‘I have just read your article in the Billericay edition of Around Town magazine. I am soon to receive some inheritance money of about £20,000 and your article suggests the RCI Bank would be the best place for my money. I would like to have easy access to this money so would I be able to use ATM 's as usual or will it cost me to do this?  I've looked at ISA's too but not sure whether they are something I should consider.  I hope you can offer some help'

The Savings Guru’s verdict:

Thanks for your question Teresa.  There’s a few options for you with Ulster Bank paying 1.25% and RCI Bank and Warley based Shawbrook Bank offering 1.20% on easy access accounts.  These accounts are all accessible via an online application.  During the application, you will be asked to provide a nominated bank account from which money can be moved in and out of your easy access savings account (for free).  So you would use these accounts as separate savings accounts and then transfer back to your current account to withdraw cash or make payments to third parties if you were looking to spend some of your inheritance.

Another potential option is, if you don’t need access to all the monies, to put some away in to an notice account (Secure Trust pay 1.45% for 90 days notice for example) or in to a fixed rate deposit.

With regard to ISAs, these are only worth considering if you are a taxpayer and have other cash savings elsewhere.  There are two reasons for this:

Personal savings allowance - basic rate taxpayers can earn £1,000 in savings interest (£500 for higher rate) without paying any tax on the interest.  If you held all £20,000 in the easy access account for a year you’d earn £240 in interest so are comfortably within those limits.

ISAs typically pay less than ordinary savings accounts e.g. at present, the best easy access cash ISA is from Paragon Bank which pays 1.05% - significantly less than the  standard easy access savings accounts we covered.

Unless you are likely to use your personal savings allowance, cash ISAs are probably not your best option.

Thanks

James

Fred from Loughborough asks:

‘Why do so few of the new banks, who tend to offer the best rates, offer cash ISAs?'

The Savings Guru’s verdict:

Great question Fred. There’s three main reasons for this.  Firstly, ISAs are a little more complex to provide and administer than ordinary savings accounts.  Therefore, most new entrants tend to start with fixed rate deposits and possibly notice accounts to feel their way in the market.  Many of the more established so called challenger banks have entered the ISA market.  The likes of Shawbrook, Aldermore and Paragon are all now regularly competing for cash ISA money.  So expect this to change as the market develops.

The second reason is the regulations around ISAs.  Cash ISA providers need to allow access to their products whereas fixed rate deposits can be unbreakable.  This is important for new banks who have small deposit basis to start with and therefore do not want the risk or challenges that come with managing a book of savings where access is permitted.  They prefer the certainty of unbreakable fixed rate deposits.

The third reason is the uncertainty around cash ISAs.  The government has introduced Innovative Finance ISAs, the personal savings tax allowance, the new Lifetime ISAs, Help to Buy ISA and increased the limits on ISAs to £20,000 in the last couple of years.  That’s an awful lot of change and, for new banks with small teams, that’s a lot to digest and predict where the market is going.  For new banks, where there is uncertainty, they often prefer to sit on the sidelines and see what happens rather than risk developing propositions which involved significant cost but may have limited take up..

Hilary Simpson asks:

‘Are there any good savings accounts for clubs and societies?  The best interest rate I have found is 0.25%.  We are currently earning no interest on our savings of over £1,000.  Can you help?'

The Savings Guru’s verdict:

Savings accounts for clubs and societies, often known as community accounts, are an area that is often neglected by banks.  Sadly they are seen as administratively difficult by many banks who forget that the individuals who do such sterling work in our communities also own businesses and have personal savings too!  The good news is there are a few options paying much more than the 0.25% you have found.

The best paying account in the market currently is Cambridge & Counties 31 day notice account which offers 1.10%.  The bad news is this is only an option for balances of £10,000 or more.

However, there are a couple of other good options:

  1. Teachers Building Society pay 0.80% on their Charity & Community Saver 35 day notice account and the application form can be downloaded from their website and sent to them by free post.
  2. Skipton Building Society pay 0.50% on their instant access Community Saver which is available in any of their 98 branches or by post.

More answers from The Savings Guru coming soon...

About The Savings Guru

We help savers get the best deal for their money by providing unique insight in to the savings market.  We help prospective banks apply for a banking licence and we help build customer services, products and marketing for them.  We also work with existing banks and building societies to improve their savings propositions.  This  insider view of savings means we are uniquely placed to help savers.

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