Lines opening up in war for savers

Safeway has joined the battle with a high-interest 'tele-bank' account. Steve Lodge reports

IT'S GOOD to talk - for savers. Safeway, the supermarket, tomorrow becomes the latest institution to launch a telephone-operated savings account that combines high interest rates with convenient access. It follows a similar move last week by the Halifax; together, these launches promise to open yet further fronts in what is proving an increasingly rewarding war for savers.

Safeway's new Direct Savings Account pays 6.75 per cent on pounds 500, 7.3 per cent on pounds 1,000 and 7.4 per cent on pounds 2,500: rates that beat pretty much anything else available on such levels of "instant access" savings. Halifax is paying from 7.3 per cent, although the minimum balance on its new Premium Savings Direct account is pounds 10,000.

Neither account requires any notice on withdrawals, but it effectively takes two or three working days to get hold of your money. Both are run via the telephone and withdrawals are made by transferring money electronically into a normal bank account.

The Safeway account has wider appeal given that it can be opened with as little as pounds 50 and its excellent rates on "normal" savings levels. The high minimum balance on the Halifax account and its limit of two withdrawals a year will make it unsuitable for many savers. But the Halifax move is noteworthy in that the recently-converted bank is also the UK's biggest provider of traditional branch-based savings accounts, which will continue, but which offer noticeably lower rates. Telephone and other new-style accounts are increasingly putting branch-based deals and even many postal accounts into the shade. Even with so-called instant access postal accounts it takes a week or more actually to encash funds.

As well as this kind of "tele-bank" offer, supermarkets such as Tesco and Sainsbury's offer competitive accounts operable via a combination of phone, cashpoint and shop till.

Even the remaining building societies, which claim to be able to offer better rates than non-mutual savings institutions, appear to be unable to keep up with the new accounts. Nationwide last week raised rates on its InvestDirect postal account very slightly, but the society says it has "no immediate plans" to allow telephone operation of the account. Savers can make cashpoint withdrawals but these cost 50p a time. And new savers are required to sign a waiver of their rights to any windfall should the society convert into a bank, although there is some doubt that this would be legally enforceable.

The attractions of the accounts are highlighted by the general narrowing of the interest-rate differential between instant access and longer-term deposits. Because interest rates generally have been rising but are expected to fall again, savers are being offered a diminishing interest rate benefit for tying up money in fixed-rate bonds or longer-term notice accounts. Best buy savings rates of 8 per cent-plus are set to become more widespread, and tele-bank and other new-style accounts may well be among them.

q Contacts: Safeway, 0800 995 995; Halifax, 0345 26 36 46; Standard Life, 0345 555657; C&G, 0800 742437; Tesco, 0345 10 40 10; Sainsbury's 0500 40 50 60; Direct Line Financial Services, 0181-667 1121; Nationwide BS, 0500 30 20 10; Alliance & Leicester, 0845 608 8860; Coventry BS, 0345 66 55 22.

THE NEW DEALS

Tele-bank and new-style 'instant access' savings accounts ...

Account Interest rate Savings required

rate (%gross)

Safeway Direct Savings 7.4 pounds 2,500 (7.3%

on pounds 1,000)

Halifax Premium Savings Direct 7.3 pounds 10,000

Standard Life Direct Access 6.9 pounds 1,000 (7.26% on pounds 10,000)

C&G Instant Transfer 7.25 pounds 1,000

Tesco Savings 6.5 pounds 1+

Sainsbury's Instant Access Saving 6.5 pounds 1+

Direct Line Instant Savings 5.8 pounds 1

Nationwide BS InvestDirect 6.8 pounds 1 (6.95% on pounds 10,000)

Alliance & Leicester First Class 7.5 pounds 10,000

Coventry BS First Instant Postal 7.2 pounds 5,000

Source: Moneyfacts

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map