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Five minute finance: Savings

Five minute finance: Savings

Category: Savings

Updated: 09/02/2010
First Published: 08/02/2010

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 It is now over 6 months old so the content may be out of date.

For the eleventh month in a row the Monetary Policy Committee voted to keep bank base rate on hold at 0.50%, a decision that continues to cripple savers. So much so that in the year to February 2010 on a £10,000 balance, savers in an average paying easy access account earned just £76 in interest, more than four times less than they would have earned in the year to February 2009.

Those that have been hit hardest by such a significant decline are those who rely on their savings to supplement their income, many of whom are pensioners. However, disgruntled savers are now starting to fight back with the launch of the action group Save Our Savers which is putting pressure on the Government and policymakers for a fairer deal for savers.

The calls for a better deal for savers have so far failed to reach the ears of the providers as the trend for cutting rates, particularly on fixed rate bonds, continued this week. The only positive news remains for those looking to invest their ISA allowance, where the average rate has increased from 2.05pc to 2.12pc since last month, with further rises expected in the next few weeks as the ISA season really kicks off.

Take notice of Close

Close Savings has launched two new notice savings accounts. The new 90 day and 120 day accounts pay 2.85pc and 2.95pc respectively. Savers can invest between £10,000 and £1m into the account, but if the balance falls below this level just 0.50pc interest will be paid. Depending on the account selected savers, must give either 90 days' or 120 days' notice to make a withdrawal. Earlier access is not permitted.

Fix with Santander

Savers looking to lock their money away for the short term are being offered a range of new fixed rate bonds from Santander. The two year bond which matures on 1 March 2012 pays 3.00pc from £1, 3.50pc from £10,000 and 3.90pc on investments between £25,000 and £2m. Once opened further additions are not permitted and access is available on closure only, subject to a loss of 120 days' interest. Alternatively, savers can opt for the 18 month and one year bonds paying slightly lower rates.

Kent targets ISA savers

Kent Reliance Building Society has launched a range of fixed rate ISAs. The Direct Fixed Rate ISA accounts pay between 3.25pc and 4.00pc depending on the term selected. Savers can invest from £100 into the accounts, which accept transfers in. If access is required before maturity a 100 days' loss of interest penalty will be payable.

Fix with Newcastle

Newcastle Building Society has just launched a range of fixed rate accounts. Its Fixed Rate Option Bonds pay 4.00pc for a three year commitment, 3.40pc over two years or 3.00pc for a one year commitment. Savers can invest between £1,000 and £1m into the bonds, with further additions permitted whilst the bond remains open. Access is available during the term subject to a loss of 90 days' interest.

Find the best savings accounts for you - Compare fixed rate cash ISAs
or compare short term bonds

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.