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Five minute finance: Savings

Five minute finance: Savings

Category: Savings

Updated: 30/11/2009
First Published: 09/11/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Since the beginning of March, the base rate has been kept on hold, but demands for savers money has pushed rates higher.

Most of the increased rates have been on fixed rate products, where providers can lock savers money in, but with so much competition some providers moved to offering increased rates on the popular easy access accounts.

In the last eight months 3.5 per cent of all variable rate accounts have seen rates increase, but a number of recent moves by providers such as Halifax, Leeds Building Society and the Marsden Building Society have meant that in the same time period, 10.1 per cent of variable rate accounts have actually reduced rates.

At the start of this month the Financial Services Authority (FSA) announced new regulations for the banks and building societies, taking over from the Banking Codes Standards Board. One of these new regulations was that on instant access savings and current accounts, customers must be given two months' notice of any disadvantageous changes to interest rates. It appears that a number of providers have made moves to affected rates before the new rules came into force.

Over 50s offered best buy rates

SAGA has just launched its Four Year Fixed Rate Savings Bond paying 4.60 per cent, which matures on 16th December 2013. The bond is open to savers aged 50 years and over looking to invest between £1,000 and £1m. The bond starts on 16th December 2009 and any money invested prior to this date will be held in a NatWest First Reserve account paying 0.25 per cent below base rate. Further additions are not permitted after the initial investment and access during the term is available on closure only, subject to 120 days' loss of interest.

M&S extends bonus offer

Savers looking to invest their ISA allowance could consider Marks & Spencer Money, which has recently extended the bonus period on its Advantage Cash ISA, maintaining one of the highest rates on the market for savers looking for easy access. The account now pays 2.50 per cent, including a 1.00 per cent bonus until 21st July 2010. Savers can invest up to £43,200 into the account as transfers in are accepted. No notice is required to access funds, but all withdrawals must be made via BACS to a nominated account.

Merger brings wider choice to the Co-op

On announcing the merger of Britannia Building Society and The Co-operative Bank, the new group announced that it would offer a wider choice of savings product to their customers. Savers are now being offered two fixed rate ISA in The Co-operative Bank branch paying 2.60 per cent for savers committing funds for one year and 3.00 per cent over two years. Savers can invest between £3,600 and £43,200 into the accounts, which accept transfers in, but access to funds are not available during the term.

Top Rates from Birmingham Midshires

Birmingham Midshires has just relaunched its 3 Year Fixed Rate Bond paying an increased rate of 4.65 per cent, or 4.55 per cent for savers opting for monthly interest. Up to £10m can be invested in the bonds, with further additions permitted whilst the bond remains open. The bond is operated by post and savers can access funds during the three year term, but all withdrawals will be subject to 90 days' loss of interest.

Rachel Thrussell, Principal Consultant – Banking at commented: "It is good to see Birmingham Midshires increase the rate on this replacement 3 year bond. Paying 4.65% from £1, it should prove popular with consumers who prefer to operate their account by post. Consumers concerned about locking their funds up for three years should not worry, as earlier access is allowed with 90 days' loss of interest."

New Online Saver from Melton Mowbray

If savers are looking for a easy access account, where a large part of the rate is not made up of a bonus, then savers could consider the new Online Easy Save account from Melton Mowbray Building Society. The account pays a monthly interest rate of 2.25 per cent and savers can invest between £1,000 and £250,000. No notice is required to make a withdrawal, but all transactions must be made via a nominated account.

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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.