Little to interest smaller savers in the high street: Rates for investors with less than 5,000 pounds are next to nothing, writes Sue Fieldman

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IF, LIKE most people, you are a small saver who wants instant access to your money, the big banks and building societies show little interest.

As rates continue to fall, the everyday saver is left to pick up tiny rates at the bottom of the pile.

Several years ago, banks and building societies were bending over backwards to woo all types of savers. Now, if you have less than pounds 5,000 to invest and you want instant access, rates are derisory.

And if you are investing hundreds rather than thousands of pounds, the interest is so low - frequently less than 1 per cent - that you would be as well blowing the lot on a new washing machine in case the Chancellor of the Exchequer increases the rate of VAT in the Budget.

Since the last drop in base rates, banks and building societies have been trumpeting the fall in mortgage rates but whispering about the fall in investment rates.

The Halifax cut its investment rates by an average of about 0.6 per cent this week. If you have pounds 250 to invest you receive 0.75 per cent net interest, which seems small enough but is better than the the 0.38 per cent that the Abbey National pays on its Instant Saver Account.

If you shop around, though, you should be able to find a bank or building society that pays more than 1 per cent.

And if you really are a small saver - between 7 and 14 years old - you can enjoy rates of more than 2 per cent. The Nationwide pays 2.25 per cent net on its children's Smart 2 Save account, which for most young people who do not pay tax, makes a 3 per cent gross return.

According to Blay's Money Master Guide, the best investments at present for someone who has pounds 250 to spare are with the Edinburgh-based Century Building Society, which pays 4.88 per cent, the City and Metropolitan Building Society, based in Bromley, Kent, at 4.31 per cent net and the Caledonian Bank, offering 4.13 per cent. Their suitability, of course, depends on your living close enough to a branch to take advantage of instant access.

The Scarborough Building Society offers an instant access rate of 5.10 per cent on its postal account. But having to get your money out by mail may mean that the access is not quite instant enough for many people.

Those with pounds 1,000 to invest are of marginally more interest to high-street institutions - apart from Barclays Bank, which only pays 1.65 per cent net on those balances. Abbey National offers one of the better rates - 3.23 per cent net. However, the Teachers Building Society pays 5.25 per cent.

If you have pounds 5,000 to invest Barclays Bank will again be of little interest. You will earn nearly twice as much by popping into the Nationwide, which pays 3.83 per cent.

While most high-street banks and building societies have already responded to the base rate change, Nationwide has yet to drop its investment rates.

A spokesman for Nationwide said: 'We have said that we will not change them before 1 March. Our most popular account is the instant access account.'

However, the Teachers Building Society is paying 5.25 per cent net for investments of pounds 5,000, and you can get even higher rates on postal accounts.

Rates are changing daily, so check around before depositing your money.

----------------------------------------------------------------- Net investment rates for small savers ----------------------------------------------------------------- (Instant access accounts) 250 1,000 5,000 % % % Abbey National 0.38 3.23 3.38 Leeds Permanent 1.13 3.19 3.49 Halifax 0.75 3.08 3.45 Nationwide 1.13 3.00 3.83 Barclays Bank 1.13 1.65 1.88 Lloyds Bank 0.75 2.25 2.33 -----------------------------------------------------------------

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