Tesco teaser rate rises to a top 1.5pc

TESCO Bank has raised the bonus it pays for the first 12 months on its Internet Saver to 0.6 percentage points after tax (0.75 points before).

It brings the teaser rate up to 1.2 pc (1.5 pc) for savers opening an account from last Friday. The rise comes less than three weeks after the bank introduced a bonus of 0.52 (0.65) points bringing the rate to 1.12 pc (1.4 pc).

But savers who opened an account between September 16 and October 4 will not benefit from the higher rate.

The new rate puts the Tesco deal among the best offers for savers looking to run their account over the internet. There are no complicated withdrawal restrictions so you can take money out as you like.

Skipton BS Bonus Saver could prove a better deal. It, like Tesco, pays 1.2 pc (1.5 pc). But the bonus — paid for the first 12 months — is a lower 0.4 (0.5) percentage points.

Once the bonus disappears you won’t see such a sharp drop in interest if you forget to move your money.

The best deals where the rate is not boosted by a bonus — and with no withdrawal restrictions — come from Kent Reliance and State Bank of India, which are also at 1.2 pc (1.5 pc).

On tax-free deals, Coventry BS has launched a fixed-rate cash Isa at 2.75 pc, but you have to tie up your money until May 2017. The minimum investment is £5,760 and you cannot transfer your existing cash Isas into the account.

The top one-year, fixed-rate cash Isa is 1.9 pc with Post Office. For two years, its 2.1 pc with Halifax.