Sainsbury's Bank: Beware short-term savings bonuses

14 June 2006
Supermarket banking company Sainsbury's has warned consumers not to be duped by short-term bonuses on savings accounts, which may skew the true value of a particular rate of interest.

Research conducted by Sainsbury's Bank revealed that the average return on no-notice accounts that had some sort of introductory bonus for four-figure balances was 4.23 per cent. This figure dropped to just 3.6 per cent once the average bonus expired, however.

"There is nothing wrong with short-term bonuses as long as savers are aware of them and have taken into account what their long-term interest rate will be," said Peter Wood, director of savings for Sainsbury's Bank.

"However, it's easy to be drawn by an attractive rate so we'd urge savers to consider their returns beyond the point when a bonus expires," he added.

According to the survey, over 11 per cent of no-notice savings accounts pay short-term bonuses, although Mr Wood claimed that consumers would be "better off picking an account with a consistent rate" due to the low returns after introductory offers have run their course.

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