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Five minute finance: Savings

Five minute finance: Savings

Category: Savings

Updated: 08/03/2010
First Published: 08/03/2010

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 It is now over 6 months old so the content may be out of date.

Many savers will have been left deflated, after the Bank of England kept bank base rate at its all time low of 0.50% for the twelfth month in a row. The ones who are suffering the most are those who don't want to tie their money up.

Savers looking for a variable rate account have been told to do their research and look beyond the big high street banks to find the best rates of interest. Just 2% of variable rate savings accounts are paying 3% or more, while more than half of the accounts pay a paltry 0.50% or less.

By comparison, two thirds of fixed rate bonds pay 3% or more, with just 1% offering 0.50% or less. However, many of the highest paying fixed rates require a commitment of four or five years and the latest research shows that the vast majority of savers are looking for no more than a two year commitment.

Savers are faced with the tough decision of whether to secure a slightly higher rate now and potentially lose out when they begin to rise, or suffer the low rates now but lock in at a higher one when they increase.

National Counties rewards ISA savers

National Counties Building Society is offering tiered rates on its new 45 Day Notice ISA, meaning savers get a higher rate the more they invest. The account requires a minimum deposit of £3,000 and pays between 2.00% and 3.10% depending on the amount invested. If access to funds is required, savers must give 45 days' notice: earlier access is not available. The account can be operated in branch, online, by post or telephone, making it available to savers across the UK.

Fix with access

Savers looking to fix the rate of interest they receive on their ISA savings, but maintain access to funds could consider the new issue of the 5 Year Fixed Rate ISA from Leeds Building Society, which pays 4.60%, one of the highest rates on the market. Savers can invest from £1 into the account, which accepts transfer in. Penalty free withdrawals of up to 25% of the original investment can be made, with further withdrawals subject to a loss of 180 days' interest.

Market leading ISA rates

This week sees the National Australia Bank Group launching market leading ISA rates through both its Clydesdale Bank and Yorkshire Bank brands. Savers can opt for the five year fixed rate ISA paying 5.00% or the one year option paying 3.00%. Savers can invest upwards of £2,000 into the accounts, which accept transfers in. Access to funds is available on closure only and will be subject to a loss of 180 days' interest.

Santander launches new bonds

Savers not looking for a long term commitment might like to consider the new bonds from Santander. The interest rate paid depends on the amount invested. Savers can opt for the one year bond paying between 2.50% and 2.75%, the 18 month bond paying between 2.75% and 3.25% or the two year option paying between 3.00% and 3.75%. Up to £2m can be invested in the bonds, with access available on closure only subject to a loss of interest penalty.

Top paying easy access accounts

West Bromwich Building Society has this week launched two new market leading easy access accounts. The Branch Bonus and Direct Bonus accounts both pay 3.00% and include a 1% bonus until 31 January 2011. Savers can invest between £1,000 and £100,000 into the accounts, with a monthly interest option available for those looking for a regular income. While no notice is required to access funds, if more than three withdrawals are made per annum, then a rate of 0.05% will be paid until 1 April, when a new year begins. As the name suggests, the Branch Bonus account is operated in branch, while the Direct Bonus is operated online, by post or telephone.

Compare fixed rate ISAs or cash ISAs and take a look at our best seller 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.