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Five minute finance: savings

Five minute finance: savings

Category: Savings

Updated: 27/01/2010
First Published: 27/08/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
With Bank of England base rate at an all time low there are a large number of accounts paying little or no interest on your savings. In fact, 25 per cent of variable rate accounts pay 0.10 per cent or less. Despite this, there has never been a better time to save.

The average easy access savings account now pays 0.76 per cent. For the first time since Moneyfacts started recording savings rates 21 years ago, the average rate is above bank base rate.

RPI inflation remains negative, meaning the real return savers are achieving on their money is 1.98 per cent for standard rate tax payers and 1.84 per cent for higher rate tax payers as they can now buy more with less money.

Savers were hit severely by falling base rates earlier this year. However as the demand for savers money remains high amongst the banks and building societies, it is likely that the only way for saving rates is up.

Bucks hits gold with new accounts

Savers have had limited choice when looking for monthly interest deals, although this week they have been given a boost by Buckinghamshire Building Society, which has launched two best buy products. The Chiltern Gold Income Generator pays 2.80 per cent and savers can invest between £10,000 and £50,000. The account is open to anyone bringing new money into the society.

Those looking to invest their ISA allowance are being offered a rate of 2.80 per cent on the 180 Day Monthly Income Cash ISA. The account accepts transfers in and savers can invest between £100 and £43,200. To access funds on both accounts savers must give 180 days' notice, or lose 180 days' interest for accessing funds early.

NS&I ups rates

National Savings and Investments has increased the rates on a number of its account, most noticeably on its Direct ISA, which has seen the rate increased by 1.20 per cent to 2.50 per cent. Savers can invest between £100 and £13,200 into the account, which accepts transfers in. No notice is required to access funds, although all withdrawals must be made via a nominated account, subject to a minimum withdrawal of £50.

Newcastle continues to reward savers

The Reward Saver from Newcastle Building Society continues to offer one of the highest rates on the market paying 3.00 per cent, including a 1.00 per cent bonus for 12 months. Savers can invest between £500 and £1m into the account, which can be operated in branch, online or by post. If savers wish to make a withdrawal, they must give 120 days' notice or lose 120 days' interest for earlier access. The account is also available as an ISA for those looking to invest both this and previous years' allowances.

Steve Urwin, Senior Sales and Marketing Executive at Newcastle Building Society, said: "It's great news that the Newcastle's products continue to offer our members some of the best features available. This is evident in the way our Reward Saver continues to feature in a number of best-buy tables months after launch."

N&P encourages regular saving

Norwich & Peterborough Building Society has launched its new Regular Saver account paying a rate of 5.00 per cent fixed for the first year, reverting to a current variable rate of 2.00 per cent. Rates include a 1.50 per cent annual bonus, providing that 12 consecutive payments are made and that no more than one withdrawal is made per annum. Savers can invest between £1 and £250 per month into the account, with no notice required to make a withdrawal.

Gary Lacey, savings product manager at Norwich & Peterborough Building Society commented: "Although we have already devised regular savings accounts for families and current account customers, we felt that other customers in this current climate required this facility."

Cracking deal from Egg

Egg has recently increased the bonus on its Egg Savings Account. The account, which is open to new customers now pays 3.25 per cent, including a 2.00 per cent bonus for 12 months. Savers can invest up to £1m into the online operated account. No notice is required to make a withdrawal, but all money must accessed through a nominated account.

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.