The last year will likely go down as the worst on record for savers as rates plummeted to historic lows. A £10,000 investment into the average savings account at the start of this year would have earned you only £83 in interest. By comparison, the same amount invested during 2007 would have gained you £393 in interest.
Unfortunately for savers, with the Bank of England predicted to keep bank base rate on hold for most if not all of 2010, it doesn't look like savers are going to have much to cheer about any time soon. As banks continue to return to more traditional way of raising funds, the demand for savers' money will continue to ease, meaning rates on traditional savings accounts are unlikely to see any significant rises from where they stand now.
The most significant boost for savers next year will come in April, when the increased ISA allowance comes into effect for all savers' not just those aged 50 years and over. This will inevitably bring a range of competitive deals both before and after the April deadline as providers once again battle it out to attract savers' tax free allowance.
Savers' greatest friend next year may well be inflation, which in recent months has steadily started to rise. If this continues, it could be that the Bank of England takes the decision to increase base rate sooner rather than later, which will bring much needed cheer from savers.
Fire up your computer for top rates
The AA is currently offering the highest rate to savers requiring easy access on its AA Internet Extra account. The account pays 3.15%, including a 2.65% bonus for 12 months from £1 and 3.30%, including a 2.80% bonus for 12 months on investments of between £50,000 and £1 million. The online operated account does not require savers to give notice to access funds, but all withdrawals must be made via BACS to a nominated account.
Take notice of top rate
If savers can give a small amount of notice before accessing their savings then they can achieve even higher rates. The 35 Day Notice account from Whiteaway Laidlaw Bank, a subsidiary of the Manchester Building Society, is currently paying 3.31%. The account is operated by branch or post and savers can invest between £1,000 and £50,000. Savers are permitted to make no more than four withdrawals per annum and as the name suggests, savers must give 35 days' notice to access funds. Earlier access is not available.
Newcastle rewards savers
Savers looking for top rates on their ISA allowance might like to consider the Reward Saver ISA from Newcastle Building Society, which is currently paying 3.00%, including a 1.00% bonus for 12 months. Savers can invest upwards from £500 into the account and accepts transfers in, so savers can invest their previous years' ISA allowances. The account can be operated in branch, by post or online. To access funds, savers must either give 120 days' notice or forgo 120 days' interest for earlier access.
Santander maintains top current account deals
Santander continues to offer the most competitive current account deals. Alliance & Leicester on its Premier Direct account is currently offering credit interest of 6.00% AER and no interest on agreed overdrafts for the first 12 months, providing customers fund the account with at least £500. Customers of Abbey can opt for the Abbey Current Account, which pays 6.00% AER on the credit option or charges just 12.9% EAR on the debit option.
Cashback for borrowers
In the recent Pre-Budget Report the Chancellor announced that the stamp duty holiday would be coming to an end on 31st December. Borrowers disappointed with this decision are being helped out by Yorkshire Building Society, which is offering 1% cashback with its new mortgage deal. The society is offering borrowers with a 25% deposit a two year fixed rate at 3.89% on mortgages up to £250,000, with a £495 arrangement fee payable.
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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