Charity Savings Accounts Spread The Word
07 August 2012 / by Oliver Roylance-Smith
We have never had such a strong and varied selection of savings products available to charities. As one of the fastest growing sectors within the savings market, we bring you an overview of our latest offerings and ask you to forward this to anyone you know involved with charities who might not be receiving a competitive rate on their savings.
A growing need
Hearing the stories from some of our first time customers about how hard it is to find a competitive rate on their charity savings, it is easy to understand why this has been a rapidly growing area for all concerned.
As with our personal customers, finding a better deal should always be a priority, but having a constant flow of competitive rates to choose from as well as a helping hand each step of the way makes the opportunity of finding and setting up a new account or fixed term deposit all the more readily available.
All bases covered
We have a savings section entirely devoted to charity savings which covers a wide range of savings needs. From instant access and notice accounts through to longer term fixed rates and alternatives to fixed rate savings, we offer a number of options and providers to choose from.
These accounts are continually being updated with the best rates we can find and, where possible, we obtain exclusives for our loyal customers, thereby allowing them to spread their savings across different notices periods, fixed terms and providers, as they see fit.
With the persistence of low interest rates on the horizon for some time to come, the need to find a competitive deal is greater than ever before and charities have certainly suffered more than most when searching for quality and choice.
Our latest selections
Despite the current economic climate, our pro-activity on behalf of customers both new and existing continues to pay off and our current suite of products is one of the most competitive for some time, particularly on the shorter terms.
Instant transfer and notice accounts
Scottish Widows Bank offers an Instant Transfer Account which pays 1.50% AER whilst electing for their 7 Day Notice Account increases the rate to 1.85% AER; both of these rates are paid on balances over £50,000 (lower rates of 1.25% AER and 1.60% AER respectively are paid on balances under these limits).
The extra 0.35% for the 7 Day Notice Account appears to make little difference to our customers since this is definitely the preferred choice and the account can be opened with as little as £500, with a maximum balance of £5m. Instructions can be taken be telephone or post and interest can be paid monthly, quarterly or annually either to your account or a nominated account with another bank or building society.
Notice accounts taking the edge
Notice accounts have risen in popularity in recent months with the flexibility of knowing how much notice you have to give before receiving your funds being exchanged for an often far greater return than is available from very short notice accounts or no notice/instant access accounts.
One such example comes from Gilliat who are offering deposits which are held with Arbuthnot Latham Private Bank. Their 180 Day Notice Account is currently offering a market leading 3.50% AER. Although the minimum deposit is higher than most at £250,000 (maximum of £2m), this rate is higher than many leading longer term fixed rates whilst providing the flexibility that access to some or your entire funds is only 6 months deferred.
If the 6 month period doesn’t quite meet the needs within your savings portfolio, they also offer a 120 Day Notice Account which is currently paying a highly competitive 3.30% AER. Both of these rates are much better than those that would be available directly from the bank and are available for a limited period only.
Reassuringly, any changes to these rates once the accounts have been set up come with a minimum notice period equivalent to the notice period of your account, which means that even if rates come down, you will have an opportunity to decide what to do.
Fixed term deposits – up to 3 years
For those who would prefer to stick with the more traditional fixed term deposit, we have a wide selection starting from 9 months. The 9 Month Bond for Charities from Principality Building Society currently pays 2.50% AER with a minimum deposit of £10,000; interest is paid at maturity.
The 1 Year Fixed term Deposit for Charities is a Fair Investment exclusive with Investec Bank and has proved very popular since its launch a few months ago. It pays a competitive 3.00% AER with a minimum deposit of £25,000. No withdrawals are permitted and interest paid at the end of the term can be made to another UK bank or building society.
Our 2 year selection comes from Cater Allen Private Bank who are currently offering 2.90% AER for those with at least £50,000 to deposit and this rate has been guaranteed until the end of August 2012. They are part of the Santander Group who fully and unconditionally guarantee all deposits held with the bank although Cater Allen also has their own banking licence which makes them a separate institution from the Santander Group for FSCS purposes.
Medium and longer term deposits – 3 years+
Cater Allen also feature in the 3 year selection with their 3 Year Fixed Term Deposit, currently offering 3.00% AER with a minimum deposit of £50,000 and interest added annually.
Scottish Widows Bank are also able to match this rate of 3.00% AER but have a lower minimum of £10,000 and interest can be paid monthly, quarterly or annually. Scottish Widows Bank also offer our leading 5 year fixed rate paying 3.80% AER, again with a £10,000 minimum.
Although Scottish Widows Bank is part of the LloydsTSB group, they too have their own banking licence which means that they do not overlap for FSCS purposes. Neither the 3 or 5 Year Fixed Term Deposit Accounts accept partial withdrawals and the current issues are due to close shortly.
Alternatives to savings
Depending on the needs of our charity customers, we also have a range of fixed rate bond alternatives which exchange a fixed return with the potential for higher returns than are normally available from term deposits. These are not designed to retain the entirety of a charity’s savings but act as a useful addition to try and achieve a higher total return from your savings portfolio.
The returns on all of the deposits here are dependent on the performance of the FTSE 100 Index, with it normally having to finish higher at some point in the future than the value at the start of the deposit (even by a very small amount). If it does not finish higher then you only receive a return of your initial deposit at the end of the term.
Popular examples include Investec’s 3 Year Deposit Plan which will provide a fixed return of 16% provided the FTSE at the end of the 3 years is higher than its value at the start (subject to averaging) – this equates to almost 5.1% a year compound which, compared to 3 year fixed rates in the region of 3.00% AER, is a considerable potential upside.
Investec also offer another popular deposit with charities which although has a slightly longer maximum term of 5 years, does have the potential to mature early or ‘kick out’ from year 2 onwards. If the value of the FTSE 100 Index at the end of years 2, 3, 4 or 5 is higher than its value at the start of the plan (subject to averaging), even by just one point, then the Kick Out Deposit Plan from Investec will mature early and provide a return of 5.25% for each year (not compounded). With leading longer term fixed rates only offering around 3.80%, again this is a considerable potential upside for sacrificing any guarantee on your returns.
A helpful hand
All of the above deposits and alternatives are constantly updated with the best rates we can find so keep checking our website for the latest selections.
By forwarding our details to other members of charities you will be helping them make the first step towards hopefully getting a better return on their savings. So if you know of any charities or anyone that works for a charity, please help them by forwarding the link to this article or telling them about our site (www.fairinvestment.co.uk
As with our personal customers, we know that often the hardest thing to do is to make changes to what we currently have in place. Although it can seem an upheaval, the benefit of receiving a potential higher return is of course in everyone’s interests.
Our customer services team here at Fair Investment Company has a vast amount of experience, making sure your application goes through as smoothly as possible and helping each step of the way.
We frequently deal with providers both before a product comes to market as well as during in order to make sure any difficulties and delays with applications are kept to a minimum and that all potential enquiries are dealt with quickly.
So don’t delay – review your charity savings rates now and spread the word…
No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.
Some of these are structured deposit plans that are capital protected. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In this event you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS), depending on your individual circumstances. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The past performance of the FTSE 100 Index is not a guide to its future performance.
© Fair Investment Company Limited