Money: Savers get back to the good times
Sunday 16 November 1997
The last time 8 per cent was available on savings accounts other than tax-free Tessas or special fixed-rate bonds was 1992, which is also the last time base interest rates, at 7.25 per cent, were this high.
Northern Rock presently stands alone among high street banks and building societies in paying more than 8 per cent on a mainstream savings account, albeit on very high balances. Select 90, its 90-day notice account, now pays 8.05 per cent before tax on pounds 100,000 or more. Select 90 rates start at 7.75 per cent on pounds 10,000, which is still highly competitive.
Another account effectively paying 8 per cent, but on just pounds 5,000 and without any notice period, is being promoted by the David Aaron Partnership, an independent financial adviser based in Milton Keynes. Called the Flexible Access Bond (FAB), it works like a normal postal account and is run by GE Financial Assurance, part of GE Capital, a huge US conglomerate. The 6.1 per cent net interest rate paid by the FAB account, if bought through David Aaron, is equivalent to a gross rate of 7.9 per cent for a basic- rate taxpayer or 8.4 per cent for a higher-rate taxpayer; for the latter, this beats even Northern Rock's rate.
The difference in the gross rates on the FAB account reflects a quirk in life insurance taxation, and the effective rate is also boosted because the IFA rebates part of its commission.
The only "catch", says the company, is that non-taxpayers cannot reclaim the tax on the interest, and so would be better off elsewhere. GE is not a mutual so there is no prospect of a windfall, but in simple interest- rate terms just about any taxpayer would stand to benefit, and all savers are protected by the Policyholders' Protection Act, which is an even stronger safety net than that protecting bank and building society savers.
At present, it is virtually impossible to find any other accounts paying 8 per cent, although the combination of further base-rate rises and ever intensifying competition could change this. More institutions are likely to enter the savings market in the new year, including Standard Life, the insurer.
However Ian Millward, investment marketing manager at Chase de Vere, a major firm of financial advisers based in Bath, said he doubted that 8 per cent would become widely available and said rates were probably approaching their peak.
Legal & General, one of the insurers already already offering savings accounts through its banking arm, is one of the few institutions to have increased its rates since the latest base-rate rise. It now pays 7.15 per cent on pounds 2,500 in its Direct Access postal account, or 7.65 per cent for money on 60 days' notice.
Among the main lenders, only Abbey National and Northern Rock have increased their mortgage rates so far to take account of the latest base-rate rise, and until more lenders move, savers are unlikely to see rates rise across the board.
Nationwide, the biggest remaining society, is holding its base mortgage rate of 8.1 per cent until the new year (which compares with the 8.7 per cent now being charged by Abbey and Northern Rock), and says that in the meantime it has no plans to touch its savings rates. The society already offers 7.5 per cent to people who are prepared to save as little as pounds 20 a month. New savers must agree to assign their rights to any future windfall to charity, although there is a question mark over whether this condition would survive a legal challenge.
Elsewhere, Tesco continues to offer 6.5 per cent on as little as pounds 1, and if you open an account this year and keep at least pounds 500 in it for the first three months, you will also get a bonus of 1,000 Clubcard points. The points are worth pounds 10 of shopping at Tesco and are equivalent to an extra 2 per cent return on a balance of pounds 500.
For our best savings rates table, see page 12. The David Aaron Partnership; tel: 01908 281544; Legal & General Bank; 0500 111200: Tesco Savings; 0345 10 40 10.
- 1 Cameron's freebie to apartheid South Africa
- 2 Is this the scariest advert ever? Japanese tyre commercial comes with its own disclaimer and health warning
- 3 Sherlock series 3: Benedict Cumberbatch and Martin Freeman provide teasers for the biggest comeback in British television
- 4 A forgotten episode in Russian history leaves links with the Philippines
- 5 People will try to reduce Mandela to a lilting reggae tune about ‘love’. They will fail
- < Previous
- Next >
iJobs Money & Business
£30000 - £40000 per annum + Bonus and Benefits: Harrington Starr: A global Con...
£150 - £250 per day: Cornwallis Elt : iPhone Rollout- Blackberry Enginee...
£55000 - £70000 per annum: Pro-Recruitment Group: A well-known and renowned in...
£450 - £500 per hour: Cornwallis Elt : Business Analyst Finance System Hy...
Day In a Page
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000
A two-bedroom split-level flat with stunning south-west facing roof terrace in the popular Brondesbury Conservation Area, £549,950.
A charming 16th century, three-bedroom detached house in Bidborough with picturesque garden