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Five minute finance: savings

Five minute finance: savings

Category: Savings

Updated: 27/01/2010
First Published: 21/12/2009

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 It is now over 6 months old so the content may be out of date.

2009 has undoubtedly been one of the most difficult years ever experienced by savers and finding the most suitable, competitive deal for their needs has become an increasingly difficult task, particularly when you consider that the UK savings market now boasts more than 2,300 products from around 150 different providers, a third more than those available five years ago.

In a bid to cut costs a number of providers have made moves to close branches, but this remains many savers' preferred way to operate their account. Two thirds of all savings accounts available can be operated in branch, but the average rate payable stands at just 0.57%, compared with 1.14% for online operated accounts and 0.99% on accounts managed via the telephone.

Next year is likely to see a number of new entrants into the UK savings market, which undoubtedly will want to increase their profile by offering market leading rates. The vast majority of these new entrants are unlikely to operate a branch network throughout the UK, which will most likely increase the gap between the rates available in branch and online operated accounts.

The only light in the gloom for savers in 2009 has been the increased demands to attract their money, otherwise the rates on offer would have likely been markedly lower. Savers will be hoping that this demand continues in 2010 and that increased competition from new entrants will boost the rates available.

Bucks strikes gold

Savers looking to put a regular amount away each month will be interested in the new Chiltern Gold Builder from Buckinghamshire Building Society, which is currently paying a variable rate of 4.10%. The account is open to new savers who invest between £25 and £250 per month into the account, but the contribution level cannot be amended once set. Savers can make one instant access withdrawal during the year. If more than one withdrawal is made or a payment is missed, the easy access rate becomes payable, currently 0.10%.

Fix and get access

Savers looking for a short term fixed rate bond but who want to maintain access to funds might like to consider the new Fixed Rate Postal Bond from Leeds Building Society. The account pays a fixed rate of 2.75% on the bond, which matures on 31st May 2010. Savers can invest between £1,000 and £1m into the bond, with further additions permitted whilst the bond remains open. Unlike the majority of other bonds on the market, savers can make unlimited, penalty-free withdrawals.

Take notice of top rates

Secure Trust Bank has just launched its 120 Day Notice Account paying 3.21%. The account can be operated in branch, by post or telephone and savers can invest between £1,000 and £1m. Withdrawals are limited to three per annum and savers must either give 120 days' notice or forgo 120 days' interest for earlier access.

ING relaunches Savings Account

ING Direct UK has relaunched its Savings Account. New customers are being offered a rate of 2.50%, including a 1.97% bonus for 12 months. The account guarantees to pay no lower than 2.50% for a year. Savers can invest up to £1m into the account, which is operated online or by telephone. No notice is required to access funds, but all withdrawals must be made via a nominated account.

Ipswich relaunches Big Bond

Ipswich Building Society has relaunched its Big Bond account paying a fixed rate of 5.10%. The bond matures on 31st October 2014 and offers a monthly interest option for those looking for a regular income. Savers can invest between £5,000 and £100,000 into the bond, with further additions permitted whilst the bond remains open. Access is not available before 31st October 2011, after which withdrawals are available subject to a loss of 180 days' interest.

Compare short term fixed rate 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.