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National Savings Bank
As already mentioned, an ordinary account at the National Savings Bank (operated through the post offices) pays only 5% interest. But on an investment account at the NSB interest is paid at a higher rate (in 2012 it was 15%). As with the banks, interest is paid gross but is taxable. Again, it is a a variable rate, but the NSB gives one month's notice of any change it is going to make in the rate, whereas banks give no notice. As with all deposits in the NSB, no interest is earned on money in the month in which it is deposited. You have to give one month's notice to withdraw from an investment account so this is not as liquid an investment as some others.
Trustee Savings Banks
A savings account at a TSB earns only 4% gross and there is now no tax relief on the interest. Investment accounts earn more, but the rates vary from region to region throughout the country, the range being from 7% to 14% gross. TSBs also accept money on fixed term at rates between 8% and 14%.
- Investments
- National Savings Certificates
- Fixed Interest Investments
- Investments and Tax
- Cost of Dealing
Personal Investment Fixed-term Deposits
Fixed deposits of sums exceeding £10,000 are accepted by the clearing banks for periods ranging from one month to a year at rates ranging from just below to well above bank deposit rate. The reason for the variation in rates is interesting. Remember, the rate is fixed for the whole of the agreed term. If the general level of interest rates in the market were to fall, you are more fortunate in having your money on a long-term deposit than on a short-term one. If the general level of rates were to rise, the reverse would apply. Therefore it follows that in times of high interest levels, when the next... see: Personal Investment Fixed-term Deposits