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Bank Deposit Account
Money placed on a seven-day deposit account at any of the commercial banks earns interest at a variable rate, generally 2% below what the banks call their 'base rate'. In July 2012 base rate was 16% so bank deposit rate was 14%. This is gross, and you will have to include the amount of interest earned in your return of income for tax purposes. If you are a basic-rate taxpayer, therefore, the tax-paid yield on a bank deposit account was 9.8% in the summer of 2000.
In theory you are supposed to give seven days' notice for withdrawals, but in practice you can draw out any amount on demand, forfeiting seven days' interest on the amount withdrawn.
Interest is calculated on the daily balance from the day you put your money in.
- Investments
- National Savings Certificates
- Fixed Interest Investments
- Investments and Tax
- Cost of Dealing
Banks
Money deposits
Money can be 'lent' or deposited in a variety of ways. The essence of this kind of investment is that you get back in cash your original investment intact - on demand, or after giving the required notice, or at the end of an agreed period. Unlike other forms of investment you cannot transfer or sell your holding to somebody else. Thus these investments are sometimes referred to as 'non-marketable', to distinguish them from those dealt with in Chapters 5 and 6, which can be sold on the market.
Straightforward money deposits, repayable on demand, comprise the most... see: Banks