Five minute finance: Savers’ saviour - Money - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Five minute finance: Savers’ saviour

Five minute finance: Savers’ saviour

Category: Money

Updated: 08/01/2018
First Published: 28/06/2010

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 It is now over 6 months old so the content may be out of date.

Activity in the savings market remains slow as providers digest the impact from last week's Budget.

Unfortunately for savers most of the changes that providers are making are withdrawals of competitive deals, with new issues being launched at lower rates.

With nearly six out of ten of all variable savings account on the market paying interest of 0.50% or less there remains little incentive for savers to put money aside, but a report from Lloyds TSB this week shows that 20 something's have been bitten by the savings bug, with a fifth putting aside up to £3,000 per annum. By comparison only one in seven savers in their fifties put aside an equal amount.

With the days of easy credit well and truly behind us and the bank of mum and dad already stretched, younger savers are realising that if they want selected luxuries they will have to wait and save the money first.

An I-Catching rate

ICICI Bank UK is offering the market leading rate for fixed rate bonds. At 4.75% (w.e.f 29/06.10), the rate is 0.19% higher than its nearest competitor. The bond has a monthly interest option for those after a regular income. Savers can invest upwards of £1,000 into the bond, but once opened further additions and earlier access is not permitted. Although ICICI has an Indian parent company the bank is fully registered in the UK and deposits are covered under the UK depositor protection scheme.

Nationwide strikes gold

Nationwide Building Society has followed the trend of other providers by increasing the length of its balance transfer deal on its Gold MasterCard. Borrowers will be charged no interest on balances transferred for 15 months, subject to a transfer fee of 3.00%. No interest will be charged on new purchases for the first three months, reverting to 16.9% APR. Nationwide customers also benefit from a positive repayment order, which sees the most expensive debt on the card repaid first.

Five star bond

Morgan Stanley has just launched new issues of its FTSE Protected Growth Plan, which tracks the market movement of the FTSE 100 Index. The plan has a six year term, but an early exit feature can be activated after three years if the FTSE 100 Index has risen by 10% or more. If savers continue to the end of the term, 100% of any growth in the Index will be payable, with a 100% capital return feature in place should the Index have fallen. Additional investment options are also available, all of which require an investment of at least £3,000.

Fun in the sun

Savers looking to put aside a regular amount each month towards the cost of their holiday may be interested in the new deal from Ipswich Building Society. Its Holiday Save account pays 3.50%, providing 11 monthly payments of between £10 and £500 are made. The society has teamed up with Fred Olsen Travel to offer savers a 10% discount on the price of their holiday. Furthermore, savers investing in the branch and postal based account will be entered into a prize draw to win an Italian cruise.

Take notice

Chelsea Building Society has just launched its 60 Day Notice account paying 2.25%. Savers can invest between £1 and £500,000 into the branch and postal operated account. If savers wish to make a withdrawal then they must either give 60 days' notice or forgo 60 days' interest for earlier access.

Switching incentive

From Monday, Santander is moving to reintroduce its £100 switching incentive for customers who move to transfer to its Preferred in Credit Rate current account. Customers who fund the account with £1,000 per month will receive a market leading interest rate of 5.00% AER on balances up to £2,500. Meaning in the first year customers can earn up to £225 in interest and bonus. No overdraft charges are applied for the first four month, after which agreed overdrafts are charged at 19.9%.

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.