Rival seeks to snatch savers from ING
Sunday 30 July 2006
The orange-and-white lifebelt of ING Direct has become well known for providing a high rate of interest on your savings.
But last week Birmingham Midshires set about muscling in on that territory with the launch of an easy-access savings account - promising to "consistently beat ING Direct's savings account by 0.25 per cent" until 1 August 2008.
With ING currently paying 4.5 per cent (before tax) - equivalent to the Bank of England base rate - this means Birmingham Midshires is paying 4.75 per cent, on balances of just £1.
The provider has launch-ed two versions of its Direct Savings account - one operated over the phone, one over the internet. Neither has any withdrawal restrictions or limits on the number of deposits.
Since launching in May 2003, ING Direct has offered a consistently high rate - and built up a strong following through its high- profile advertising.
"Birmingham Midshires is trying to ride on the back of the success of ING Direct," says Sue Hannums at independent financial adviser Chase de Vere Wealth Management. "It is offering a simple account with a great rate and no bonuses, but it's going to have to do a lot more to get near to ING Direct's popularity."
She adds that while ING Direct is not the best buy, its "marketers have done such a good job of getting people to think they are getting a fantastic deal".
Andrew Hagger at financial analyst Moneyfacts agrees. "ING has gained a reputation for service among its customer base of over a million - and in the past has offered additional interest rate incentives to remain loyal," he says. "While Birmingham Midshires will undoubtedly woo savers currently receiving a much poorer rate, I'm not sure how many will defect from ING."
He points out that while Birmingham Midshires is offering a quarter point more, a saver with a £5,000 credit balance earns only an extra £12.50 a year.
However, he says it is "refreshing" to see another player introducing a "no- strings account paying a decent rate of return."
"This is far preferable to an account with a seemingly high rate of interest, which only disappoints consumers when they discover prohibitive conditions in the small print."
Ms Hannums adds that there are higher-paying accounts available, and picks out an easy access deal from the Anglo Irish Bank paying 4.8 per cent, although this requires a minimum balance of £500.
"Other providers offering higher rates tend to include an introductory bonus which then drops away."
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