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Five minute finance: Spread your saving's risk

Five minute finance: Spread your saving's risk

Category: Savings

Updated: 06/09/2010
First Published: 06/09/2010

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 It is now over 6 months old so the content may be out of date.

It is now more than two years since the collapse of the Icelandic banks and some well known UK banks were rescued by the Government, but the memories remain etched in many savers' minds. Even now, savers who invested with Keydata are still trying to get their money back after the firm went under. As a result, it is little surprise that the safety of their money is now of paramount importance to savers, alongside getting a competitive rate.

Numerous mergers and acquisitions amongst banks and building societies has meant that making sure your money is fully protected is not quite as easy as it once was. Many providers operate under the same banking licence, limiting the amount of cover under the Financial Services Compensation Scheme to £50,000 per licence, rather than per provider.

Spreading your money around to maintain full protection is likely to get harder still at the end of the year, as 12 of the merged providers that had previously had separate banking licences begin to operate under just four licences going forward.

If you're thinking of spreading your savings amongst a number of different providers, why not consider some of the new savings accounts below:

Shopping at Sainsbury's for a fixed rate

Sainsbury's Finance has launched a new best buy one year fixed rate bond at 2.8%. Investors can deposit between £5K and £50K and the account can be opened either online or by telephone. No withdrawals can be made during the fixed term and interest can either be paid monthly or annually.

HSBC expands with an 18 month option

HSBC has increased the rates on its fixed bond saver range by up to 0.45% and has expanded it range to include an 18 month term product. This new addition pays 3.10% up to £50K and 3.30% from £50K and above. Minimum investment is £2K and no additional deposits are permitted. The account holder must have or must open an HSBC current account or savings account other than an ISA.

Santander rewards loyalty

Santander has launched a competitive Loyalty Tracker Bond paying 3.25%. The account tracks any changes in the Bank Base Rate until 1 October 2011. The account is available to customers that have their main current account, mortgage or investment account with Santander or decide to switch their current account to Santander. The same product is on offer to non customers paying 3.00%. Investors can deposit between £10K and £100K but no withdrawals are allowed during the term of the product.

first direct up by a quarter

first direct has increased the rate on its fixed rate savings bond by 0.25% to 2.80% and the product now sits within the top ten short term deals. The account holder must hold another first direct account other than an ISA or regular saver and must hold the account for the entire term. The minimum deposit allowed is £2K and maximum is £1 short of £50K. No withdrawals are allowed during the term but the account can be closed during the term with a £100 fee being charged.

Find the best savings rates for you - Compare savings accounts

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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