Bumper rates are available, but with strings attached
Interest of up to 10 per cent is tempting, but don't forget to check the fine print.
Sunday 10 May 2009
Interest rates were left on hold at a historic low of 0.5 per cent last week, and some savers are receiving nothing for the cash piles they have worked hard to build up. So any account that offers above the norm is bound to attract savers' attention.
It is possible, even in these dark days, for savers to find accounts that pay 10 per cent. But beware these regular savings accounts because they come with strings attached which, in the long run, could mean that savers don't get such a good deal. Regular saver accounts allow you to pay in a set amount each month, mostly between £10 and £250, which you generally cannot touch until the end of the term, usually 12 months.
If you do make a withdrawal, you sacrifice the interest earned either in the month of withdrawal or for the whole term of the account. In return for agreeing to these strict terms, you will get quite a high rate of interest.
The top paying is the HSBC regular saver which offers 10 per cent. It is used as an incentive to get people to sign up for their HSBC Plus, Premier and Passport account, all of which cost a minimum of £12.95 per month. Account holders do receive freebies, such as travel insurance and breakdown cover. However, if you are not going to take advantage of all the added extras, then they are rarely worth getting just for the interest rate.
David Black from financial information service Defaqto says, "The issue with added value current accounts is that they are generally sold on the basis of the incentives offered. At the top end there are some quite good things, but you have to look at whether you actually want the incentives and whether they are good enough quality for what you need."
Other products that are linked to high regular saver rates are free. Alliance & Leicester has relaunched its Premier Regular Saver this week offering 7 per cent on monthly deposits between £10 and £250. To get this rate you have to switch to a Premier Current Account which is free and comes with extra goodies such as European multi-trip travel insurance and a free overdraft facility.
Steve Gracey, a spokesman for Alliance & Leicester, says, "We are challenging the big-name banks whose current accounts offer quite poor value. By coming up with offers like these we are hoping that we can focus people on what are good-value products and which are bad value." However, the Alliance & Leicester rate comes with its own restrictions. Firstly, the regular saver account is available only to new premier current account customers who pay in a minimum of £500 per month.
However, new customers cannot get both the £100 cash incentive A&L is offering until the end of May to switch and the regular saver account. You also cannot change the monthly amount you decide to pay into the regular saver. Remember, failure to meet a payment in any month will result in the loss of any interest earned.
First Direct offers a similar savings and current account combination. Its regular saver ISA also pays 7 per cent and is available only to First current account holders who must pay at least £1,500 each month into their accounts. The First current account is free but does not pay any interest and comes with no freebies. However, the regular saver is tax free which offers a considerable incentive.
The bottom line, though, seems to be that if you are in search of high interest rates, then signing up for other products to get a high rate regular saver is not the answer. As Michelle Slade from financial information service Moneyfacts.co.uk says: "To move to another current account simply for a tie-in savings account may not leave you in such a good position. You need to look at the whole package including any restrictions, and see if the account suits your individual situation."
If you already have a considerable balance saved, a good alternative is a fixed-rate bond. Market leading products are offering about 4 per cent for a one-year bond, lower than the top regular savers, but payable on your entire balance and not just a set amount per month. Alternatively, the best regular saver with no strings attached is from Barclays and pays 5.84 per cent.
Crowd-to-let: How crowdfunding sites can give investors a slice of the property market for £500
General Election 2015: How you vote next week could affect your finances
Dirty tricks in a divorce can cause some nasty surprises
Social tenants locked into energy tariff for 40 years
Have you won £1m in the May Premium Bonds draw?
- 1 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 2 Pub landlord captures moment customer falls over on CCTV – just like Del Boy did on Only Fools and Horses
- 3 Top Gear: Jodie Kidd, Philip Glenister and Guy Martin 'in advanced talks' to join show
- 4 Frankie Boyle on Scottish independence: 'In the Interests of Unity, F**k Off'
- 5 How to gain confidence and maximise your sexual potential
In defence of liberal democracy
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
Andy McSmith's Sketch: Feisty audience is the real star of an enlightening show
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...
Day In a Page
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings