No big deal from the Pru

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The Independent Online
Savers hoping for a lifeline from poor interest rates will be disappointed by accounts launched this week by Prudential, the life insurer. And windfall hunters must wait and see: while the Pru is interested in buying a building society, it is "in no hurry" to make the acquisition.

Its new telephone banking arm has launched two savings accounts and a range of mortgages, and expects to add cheque accounts and credit cards.

The Pru is offering an interest-rate guarantee on its savings accounts until the end of 1997 - that rates will be better than the average of those paid by the 10 largest banks and societies on branch-based accounts of a similar type. But this still leaves its rates looking unimpressive and ignores comparisons with higher-paying postal accounts, even though the Pru's new accounts are in effect postally operated themselves.

Its High Interest Deposit account - an instant-access postal account - pays from 3.1 per cent and has a minimum balance of pounds 500. But even on pounds 5,000 it only pays 3.25 per cent, well below the rates on many postal accounts. Its 60-day Notice Account pays 3.85 per cent on the pounds 2,000 minimum, but on pounds 5,000, for example, this only rises to 3.95 per cent - and to get even these rates savers are limited to just two withdrawals a year.

Direct Line, the telephone-based insurer which has also moved into savings accounts, pays 4.5 per cent to balances of pounds 500 and 4.75 per cent on pounds 5,000 in its own instant-access account.

The Pru has also launched fixed- and variable-rate mortgages dismissed as "not the best, but not the worst" by one broker. But it has promised a "clean sweep" on hidden charges. In particular, mortgage overpayments and one-off repayments will be credited immediately.

q The banking arm of Scottish Widows is offering cheap loans against the value of most endowment savings policies. The current rate is 9.11 per cent.