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Five minute finance: Savings

Five minute finance: Savings

Category: Savings

Updated: 04/12/2009
First Published: 23/11/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
At the beginning of 2008 the savings best buys were dominated by building societies, which accounted for around two thirds of all selections. However, during 2009 it has been the banks that have come to the fore, reducing the building societies, dominance of best buys to just 54%. Recent legislation requiring providers to hold increased levels of savers deposits appears to have driven banks to up their game.

Today, 15.3% of all accounts offered by banks pay 2.50% or more, but only 9.7% of building societies offer such a competitive rate. Overall the average easy access rate offered by a bank is 0.98%, a third higher than that offered by building societies, which stands at 0.65%.

Those prepared to give notice or looking to take advantage of their tax free allowance in a cash ISA will also see higher average rates from banks rather than building societies. Although, the recent moves from Manchester Building Society and Chesham Building Society see both of them moving to the top of their respective best buys. It is only on fixed rate bonds where building societies have maintained the most competitive rates on the market.

One way to ensure the rate of interest you receive won't fall below a certain level is to opt for an account with a rate guarantee. Research from Sainsbury's Finance shows that only one in six easy access accounts offer such a guarantee, with only 5.3% offering at least to match base rate.

Manchester tops the table

Manchester Building Society has just launched a new issue of its Premier Notice account paying a market leading rate of 3.31%. Unlike many other top paying accounts, the rate does not include a short term bonus. The account is open to new customers to the society and savers can invest between £1,000 and £50,000. Savers are required to give 35 days' notice to make a withdrawal and are limited to no more than four withdrawals per annum.

Premium rates from Close Savings

Close Savings, part of the Close Brothers Group plc, has just launched a range of competitive fixed rate bonds paying 4.20% for a two year commitment and 4.65% for a three or four year commitment. Savers can invest between £10,000 and £10 million into the Premium Gold accounts, which are operated in branch or by post. Once opened, further additions and earlier access are not permitted.

A little extra from the Halifax

Halifax has this week increased rates by as much as 2.55% on its Web Saver Extra Account, which now pays 2.80%. Savers can invest from £1 into the online based account, with no limit on the amount that can be invested. No notice is required to make a withdrawal, but if savers make more than one withdrawal per annum, subsequent withdrawals will be subject to 30 days' loss of interest.

Investors bank on growth

Abbey has just launched a new issue of its Guaranteed Growth Plan offering investors potential returns of up to 50% of the growth in either the FTSE 100 Index or the Halifax House Price Index. The account matures on 20 July 2015 and guarantees to pay a minimum return of 11% gross. The plan is available until 5 January 2010 and requires a minimum investment of £1,500.

Top ISA rates from Chesham

Chesham Building Society has just launched a new issue of its Cash ISA 120 paying 3.00%, including a 0.75% bonus until 31st December 2010. Savers can invest upwards of £500 into the account, with transfers in from other providers accepted. The account is operated in branch or by post and savers are required to give 120 days' notice to make a withdrawal, although earlier access is available subject to 120 days' loss of interest.

Find the best savings account 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.