Halifax woos savers with 6% savings account

HBOS threw down a challenge to its banking rivals in the increasingly competitive savings market yesterday with a new account paying 6 per cent a year before tax, 2 percentage points above the Bank of England base rate. It will be available from 1 March through branches of Halifax and Bank of Scotland.

Savings accounts normally pay less than the base rate, which has led other groups to accuse HBOS of launching an uneconomic loss-leader.

Nick Robinson, the head of savings at Halifax, said: "In the absolute short term this is an investment. In that sense every new product has a cost of recruiting customers. But people have lost sight of the importance of saving on a regular basis. This new product and its market-leading interest rate should change all that. There will now be a real incentive for people to start saving again, and that will benefit us in the long term."

The account, called Halifax Regular Saver, requires users to deposit between £25 and £250 each month by standing order for 12 consecutive months, making a maximum of £3,000. In return they are guaranteed 6 per cent gross interest, fixed for 12 months. That is worth 4.8 per cent after tax to a basic-rate taxpayer. At maturity, the capital and interest is moved into an instant-access account.

If the account is closed early, the rate of interest will be at the Web Saver rate, which will be 4.3 per cent with effect from today. The account is open to new and existing customers aged over 16, but it is limited to one account per customer per year, to enforce the £250-a-month ceiling.

Mr Robinson said: "We have hammered costs down as low as we can, and we have bought forward in the derivatives market. We also expect base rate to rise during the year, which will narrow the differential with our 6 per cent."

HBOS shares fell 4p yesterday to 719.5p.