As base rate fell, Moneyfacts.co.uk noticed a change in the savings habits of the visitors to its website. Historically, the biggest proportion of savers were searching for easy access accounts, but as base rate and, in turn, savings rate tumbled, savers began to favour fixed rate investments in a bid to achieve a higher rate of return.
During January, 40% of visitors to our site were looking for Article Text Link fixed rate savings accounts. However, just a few months later, this has declined to 32%, the lowest level in a year. Rates on fixed rate bonds have steadily fallen, more noticeably on shorter term deals where the market leading one year bond now pays the same rate as that on an easy access account.
Savers see little incentive in locking their money up in the short term, when they can achieve a comparable rate on an easy access account and benefit from any future bank rate rises. Despite providers' best efforts to attract savers into longer term deals, for most this wisely isn't an option, as what may appear a competitive rate now, is likely to be highly uncompetitive in a few years' time.
Chelsea Rewards Loyalty
Chelsea Building Society has launched its e-Saver Reward account paying 2.60%, one of the highest easy access rates on the market without a temporary bonus. Interest is paid monthly for those looking for a regular income and savers can invest up to £1m. No notice is required to make a withdrawal from the online operated account. However, no interest is payable in the month a withdrawal is made, with the exception of April, when there is no penalty.
Best Buy Bond
Kent Reliance Building Society is now offering the market leading rate for savers looking for a nine month commitment. Its Direct Nine Month Fixed Rate Bond is paying 2.75%, with a monthly interest option for those wanting a regular income. Savers can invest between £100 and £1m into the postal operated bond, with further additions not permitted. Access is available on closure only in exceptional circumstances and will be subject to a loss of 100 days' interest.
Defend Against Market Movements
Investors wanting to invest in the stock market, but worried about losing out if markets fall, might like to consider the new Protected Equity Bond from Nationwide Building Society. The bond offer returns linked to some of the world's leading stock markets, but money is invested in a deposit based account and is protected from market falls. The bond, provided by Legal & General, has a six year term and offers potential returns of between 8% and 50% gross. Savers taking out the plan, which is also available as an ISA, will also be eligible for Nationwide's one year Combination Bond paying 3.50%.
Market Leading Transfer Deal
While other key players in the credit card market have reduced the length of their balance transfer deal, Clydesdale and Yorkshire Bank have bucked the trend, by offering 0% for 16 months on its Gold MasterCard. All transfers will be subject to a fee of 3.00%, minimum £3. The card also offers 0% for three months on new purchases, reverting to a typical APR of 16.9%.
Frequent Travellers Offered Rewards
American Express has teamed up with Starwood Hotels and Resorts Worldwide to launch a co-branded credit card. Cardholders earn one Starpoint for every £1 spent on the card, with a bonus 10,000 Starpoints given if £1,000 is spent on the card in the first three months of issue. Points can be redeemed for complimentary hotel stays, room upgrades, flights and concert tickets. The card charges an APR of 32%, which includes a £75 annual fee.
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