Banking News Regular Savings Accounts Booming As A Result Of Tight Credit 1866
Regular savings accounts booming as a result of tight credit
08 July 2008 / by Rebecca Sargent
Banks are desperate to shore up their balance sheets which have been hit by sub-prime lending losses, with cash from regular savers. And consequently more and more products are being introduced to the market, with increasingly attractive rates.
According to the research, in the last year or so, the number of regular savings accounts available soared from 82 to around 107 today. In addition, the average interest rate has climbed to 5.25 per cent, up from 4.23 per cent in January 2007.
Mortgage rates have suffered despite the cuts to the Bank of England’s base rate. However, regular savings accounts now have average rates above the base rate.
As banks compete against each other, the research showed that interest rates can vary by as much as 10.1 per cent. The study found that savers could benefit from a rate as high as 12 per cent with Alliance & Leicester’s Premier Regular Saver or be hit by rates as low as 1.9 per cent on balances below £500 with NatWest’s First Home Saver.
Sean Gardner, Director at MoneyExpert.com, said: “Every cloud has a silver lining and the credit crunch clouds have at least helped deliver better deals for savers- or at least those who can afford to save.
“It is striking that average rates on regular savings accounts are around one per cent better than they were 18 months ago when the Bank of England base rate was actually higher than it is today.
“Anyone committing to regular savings deserves a good deal from their bank or building society so it is disappointing that there are still some dismal accounts out there,” Mr Gardner concluded.
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