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Five minute finance: Bonuses on savings accounts

Five minute finance: Bonuses on savings accounts

Category: Savings

Updated: 28/07/2010
First Published: 26/07/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

In order to tempt savers away from their competitors, providers of savings accounts have increasingly used short term bonuses to temporarily boost the rate on offer. When the credit crisis first hit in July 2007, one in ten savings accounts included a bonus; today, the figure is closer to one in five savings accounts.

Despite the continued increase in the use of bonuses, the proportion of the overall rate made up of the bonus has started to fall. In October 2009, the average size of the bonus peaked at 1.16pc, with the biggest bonus available being 2.70pc. Today, the average has fallen to 0.87pc, while the size of the largest bonus has fallen to 2.30pc.

New rules introduced earlier this year mean providers now have to give reasonable warning when a bonus period is coming to an end. This should help to ensure that savers are less likely to fall into the trap of languishing on an uncompetitive rate without realising it.

Saffron breaks new ground

The new 12 Month Fixed Rate Regular Saver from Saffron Building Society is paying a best buy rate of 4.00pc. Savers can invest between £10 and £200 per month into the branch and postal based savings account. Unlike many other fixed rate regular savings deals, this savings account offers savers the flexibility to make unlimited withdrawals without penalty, and allows the size of the monthly deposits to be altered.

Cheshire steps up a gear

At a time when the returns on fixed rate savings accounts continue to fall, Cheshire Building Society is bucking the trend by increasing rates on its one, two and three year fixed rate bonds by up to 0.60pc. Savers are being offered a rate of 2.75pc for a one year commitment, 3.60pc on its two year bond or 4.10pc on its three year bond. Savers can invest between £100 and £1m into the bonds, with further additions available whilst the issues remain open. Earlier access is not permitted.

Find the best selling savings accounts online - Compare all savings accounts

Market leading credit card

Customers looking to transfer an existing debt are being offered a market leading deal of 0 % for 16 months from both NatWest and Royal Bank of Scotland. All balances transferred will be subject to a transfer fee of 2.90%, minimum £5.00. The deal is available to new customers who apply online for the card, which also offers 0 % for 3 months on new purchases. After the initial period has ended, the card charges a purchase APR of 16.9%.

Click here if you want to find out more about Natwest Platinum Credit Card.

Click here if you want to find out more about RBS Platinum Credit Card.

Find the longest interest-free deals on credit cards - Compare credit card deals

Yorkshire lands knockout mortgage blow

Yorkshire Building Society has reduced the rate on its five year fixed rate mortgage to a market leading 3.99%. The deal is available to borrowers with at least a 25% deposit and will be subject to a £995 fee. Borrowers are able to take advantage of the flexible options on offer allowing them to make over payments and reduce the long term costs of their mortgage.

Find the best mortgage rate on the market - Compare best selling mortgages

Any rates or deals quoted in this article were correct at the time of writing.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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