The last few weeks have been telling for savers and have possibly illustrated what we might expect from rates in the coming months (at least). As we’ve mentioned in another blog item, the government has launched a new ‘Funding for Lending’ scheme which could be bad news for savers. Added to that some economists are predicting that the Bank of England Base Rate could actually be cut as soon as November this year, with the UK Growth Forecast dropping to 0%.
However, the Bank of England Governor, Mervyn King has said the he believes a cut in the base rate would be more counterproductive than beneficial. That’s not saying it won’t happen but one thing’s for sure, savings rates seem to creeping down. Whether that’s the ‘Funding for Lending’ scheme, the prospect of a base rate cut or just the providers taking advantage of the pessimistic outlook, who knows? What we can say is that it’s clearly never been more important to keep on top of your savings rates as, as Tesco’s would say, every little helps!
For those of you not already signed up to our regular Rate Alert service, or simply for those that might have missed it – here’s a rundown of the more “interesting” savings products. Hey it’s what we do!
On Monday, 6th August, the West Brom launched its WebSave ISA Issue 6 paying 3.16% gross (3.18% AER), which includes a 1.66% bonus up until the 30/09/2013. This Variable Rate Cash ISA requires 60 days’ notice, or loss, for all withdrawals and requires a minimum opening balance of £1,000.
Virgin Money launched a new variable rate notice account this week paying a fairly competitive 2.85% gross/AER (2.82% for monthly income). The Virgin 90 Day notice account is available via the internet, branches, telephone or by post on a minimum opening balance of £5,000. As the name suggests, withdrawals are available on 90 days’ notice.
ING Direct rates have been on the move over the last month with rates changing on both its Cash ISA and easy access Savings Account. The Cash ISA was increased last month for new customers but cut this month for new customers who now receive a variable rate of 3.00% AER/2.96% gross. The new rate (reduced from 3.20% AER on the previous issue) includes a bonus of 2.00% AER for the first 12 months from account opening, so will revert to the Cash ISA standard rate of 1.00% AER/gross p.a after this time. This Variable Rate Cash ISA operates on a minimum of just £1.
ING Direct also changed the rate on its Savings Account (for new customers) but this time, like the Cash ISA above, the rate has been cut. The new rate on this easy access account now stands at 3.05% AER (3.01% gross) down from 3.19% AER on the previous issue. This includes a fixed bonus of 2.51% gross for the first 12 months with the minimum opening balance just £1.
Cahoot launched a new issue of its popular 1 Year Fixed Rate Bond (Issue 6) but maintained the best buy rate of 3.60% gross/AER. The new issue retains its spot on our Fixed Rate Best Buy table with a fixed rate maturing on the 1st November 2013. It does come with a fairly high minimum balance of £25,000 and unfortunately isn’t available for those seeking a monthly income.
Derbyshire Building Society launched NetSaver Issue 4 paying 3.06% gross/AER (including a 2.06% gross bonus until 30/11/13). The online easy access account operates on a minimum of just £1, but needs a minimum of £1,000 to open the account.
Santander has withdrawn its market leading 2 Year Major Fixed Rate ISA (at 4%) and launched its 2 Year Fixed Rate ISA paying a lower rate of 3.60% AER (for all new customers). The new account is available on a minimum of £500 with transfers in permitted.
Santander has also withdrawn its best buy Easy Access account, eSaver issue 5 (at 3.20%) and launched eSaver issue 6 paying 3.00% AER. The account is available via the internet on a minimum of just £1 with all withdrawals available without penalty or restriction. The rate includes a 2.50% bonus for the first 12 months giving an underlying rate of 0.50%, so don’t forget to add this account to your Rate Tracker Portfolio should you take it out. We’ll then let you know when the bonus is due to mature and what best rates are at that time.
Saga launched a new 2 Year Fixed Rate Bond paying 3.80% AER on a minimum of £1. The account is available for the over 50s only and enters our best buy tables with the best fixed rate for a 2 year term.
The AA has withdrawn its 1 year fixed rate bond (at 2.70% AER) and competitive 2 year fixed rate bond (at 3.80% AER) and instead launched a new 3 year fixed rate bond. This pays a competitive 4% gross/AER and enters our fixed rate bond best buy tables with this now leading rate.
United Trust Bank has improved the rates on its 1 & 2 year fixed rate bonds. The 1 year fixed rate deposit account has increased from 2.75% to a best buy 3.46% AER and now appears in our fixed rate bond best buy table. The 2 year rate has also increased to 3.46% (from 2.80%) however better 2 year rates are available elsewhere. Check out the full best buys for details.
Shawbrook Bank has launched a competitive monthly income paying fixed rate bond (issue 1). The new account pays 3.74% gross monthly, 3.80% AER, fixed until 6/10/2014 and is available on a minimum of £5,000.
And finally, in case we missed it, The West Brom building society decided to remind us again that it has launched its WebSave ISA (mentioned above). We heard you the first time West Brom but thanks for the reminder. Those of you already signed up for our Rate Alert Service would have heard about the launch of this product 3 days before it was launched BUT, as it’s a fairly good rate, we’ll say it again!
Nationwide – Flexclusive Regular Saver, 6% fixed until 31 October 2013.
Nationwide’s new Flexclusive Regular Saver pays a competitive 6% gross pa on a minimum monthly deposit of £25 up to a maximum £250 pm. There’s no penalty for missed deposits or withdrawals which, as we’ve mentioned, makes this account pretty unusual given the high rate of interest. The catch of course is that you must have, or move to, the Nationwide FlexAccount and use this as your main current account in order to benefit. Although there are better regular savings rates that can be found, such as with HSBC and First Direct paying 8%, these accounts are a lot more restrictive. And, like Nationwide, you must already have your current account with them, or be prepared to move it.
Nationwide – Regular Savings (for all customers), tiered rates starting from 0.10% up to 2.50% gross pa
The standard Regular Savings account from Nationwide is pretty confusing as the rate is calculated monthly and is dependent on the amount the balance increases each month, not on the overall balance. It starts at 0.10% for an increase of between £1 up to £99, 1.35% for £100 up to £199, 1.85% for an increase of between £200 to £499 and 2.50% for between £500 and £1,000. So if you’re paying in £100 each month you’d receive a rate of 1.35%. However, if you change this amount and then save £50 a month you’d receive a rate of 0.10% for those months. Get it? Hmmm. It’s way too confusing and the bottom line is that even if you’re paying in over £500 every month, this is poor value for regular savings.
With the launch of the new Flexclusive Regular Saver you could argue that Nationwide are rewarding their bank account customers with better rates (for those who have a FlexAccount that is) or you could just say they’re trying to lure in more bank account customers with an inflated rate of 6% and offering other, less profitable customers, the less than appealing account. Simply from a customer’s perspective where is the encouragement to save with an interest rate of just 0.10%?