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Traditional V's New Banks: How Savings Accounts Fare
[November 13, 2012]

Traditional V's New Banks: How Savings Accounts Fare

CHESTER, England, November 13, 2012 /PRNewswire via COMTEX/ -- New kids on the savings block can offer more competitive deals Analysis from MoneySupermarket has revealed that a host of new banking entrants can currently offer consumers a better return on a range of savings products, more so than deals offered by the traditional high street banks.

Easy Access ISAs Marks & Spencer Bank is currently offering a rate of 3.00 per cent on its Easy Access ISA*, while The AA offers a rate of 2.70 per cent AER on its Postal Access ISA however, there are minimum deposits of £100 and £500 respectively on these accounts. By comparison, the best offering from one of the traditional high street banks is 2.64 per cent with Barclays Loyalty Reward ISA which also includes a bonus of 0.60 per cent for 12 months, and is only available to existing customers.

Fixed Rate Bonds When it comes to Fixed Rate Bonds there are also some interesting deals around that go beyond just the traditional high street offers. Shawbrook's Fixed Rate Bond account tops the table for one year bonds with an AER of 3.00 per cent although there is a minimum deposit of £5,000. Bank of Baroda offers a rate of 2.95 per cent, and this account requires a minimum deposit of just £500. However, even Tesco Bank offers a better interest rate than the main high street banks, at 2.75 per cent and with a minimum deposit requirement of £2,000. The best one-year offerings by RBS and NatWest both pay 2.30 per cent AER with a minimum deposit of £2,000, whilst Santander insists on just £500 for its bond paying 2.30 per cent.

Easy Access Savings Despite significant falls in interest rates, it is the new players who continue to offer rates ahead of the high street banks. Tesco Bank's Internet Saver account offers a rate of 2.40 per cent, but this does include a bonus rate of 1.15 per cent over 12 months. The best deal offered by one of the high street banks is Halifax's online saver paying 2.05 per cent, although this account doesn't include any bonus rate.

Kevin Mountford, head of banking at MoneySupermarket commented: "We've seen a rise in new competition on the high street, for example with the supermarkets and new entrants such as Metro Bank appearing, which has created more competition and choice for consumers. The newer entrants are offering some good accounts at the moment with interest rates that are currently edging ahead of the more traditional high street banks, meaning savers can get a better return on their money. However, some have a larger deposit requirement so it's important savers check all options first. It is also worth remembering that the Financial Services Compensation Scheme (FSCS) protection levels for new entrants is the same £85,000 that you get from the main high street banks.

"Our analysis underlines the importance of not necessarily accepting the deal being offered by your bank. Shopping around for a home from your savings can help you maximise the returns on offer, especially when rates have been so volatile and every penny counts. However, it is also important to keep an eye on the rate being paid on your account as although you may be offered good rates initially, they will drop over time, no matter which provider your savings are with." Main Banks Fixed Rate Bonds - based on GBP25,000 Minimum Provider Term Deposit AER Royal Bank of Scotland Fixed Rate Bond Internet Only Addition 1 Year GBP2,000 2.30% NatWest Fixed Rate Bond Internet Only Addition 1 Year GBP2,000 2.30% Santander Fixed Rate Bond 1 Year GBP500 2.30% Halifax Fixed Saver 1 Year GBP500 2.25% Lloyds TSB Term Deposit 1 Year GBP2,000 2.00% Barclays Fixed Rate Savings Bond 1 Year GBP500 2.00% HSBC Fixed Rate Saver 1 Year GBP2,000 1.80% Best Buys Fixed Rate Bonds - based on GBP25,000 Minimum Provider Term Deposit AER Shawbrook Fixed Rate Bond Issue 3 1 Year GBP5,000 3.00% Bank of Baroda MAX Fixed Rate Bond 1 Year GBP500 2.95% UBL Fixed Term Deposit 1 Year GBP5,000 2.75% Tesco Bank Fixed Rate Saver 1 Year GBP2,000 2.75% Metro Bank Fixed Term Savings 1 Year GBP500 2.50% Easy Access ISAs - based on GBP5,640 Minimum Provider Deposit AER Transfer In Barclays 2.64% Loyalty Reward (includes a ISA (existing 0.60% bonus Barclays for 12 customers only) GBP1 months) No 2.35% (includes a Halifax 2.10% bonus ISA Saver for 12 Online GBP1 months) Yes 2.00% (includes a 1.00% bonus Lloyds TSB for 12 Cash ISA Saver GBP1 months) Yes NatWest e-ISA GBP1 2.00% Yes HSBC Cash e-ISA (existing HSBC customers only) GBP1 1.75% Yes Royal Bank of Scotland Instant Access Cash ISA GBP1 0.55% Yes Santander Easy ISA GBP1 0.10% Yes Easy Access ISAs - based on GBP5,640 Provider Minimum Deposit AER Transfer In Marks & Spencer Advantage Cash ISA GBP100 3.00% Yes 2.70% (includes a The AA 2.20% bonus Postal Access for 12 ISA (Issue 4) GBP500 months) Yes 2.50% (includes a Tesco Bank 0.50% bonus Instant Access for 12 Cash ISA GBP1 months) Yes Virgin Money Easy Access Cash eISA Issue 2 GBP1 2.40% Yes Metro Bank Instant Access Cash ISA GBP1 2.35% Yes Easy Access Savings Based on GBP1,000 Provider Min Invest AER Bonus Halifax Onilne Saver GBP1 2.05% N/A 1.00% Santander for 12 eSaver (Issue 9) GBP1 1.50% months 0.75% Barclays for 12 e-Savings Reward GBP1 1.26% months 1.10% Lloyds TSB for 12 Easy Saver GBP1 1.20% months NatWest e-Savings (existing NatWest customers only) GBP1 1.00% N/A Royal Bank of Scotland Direct Saver GBP1 1.00% N/A HSBC Online Bonus Saver GBP1 0.75% N/A Sourced by 13.11.2012 Easy Access Savings Based on GBP1,000 Provider Min Invest AER Bonus Tesco Bank 1.15% for Internet Saver GBP1 2.40% 12 months Marks & Spencer M&S Everyday 1.00% for Savings GBP1 2.35% 12 months Virgin Money Easy Access eSaver Issue 4 GBP1 2.20% N/A GE Captial Direct Bonus Saver Issue 0.70% for 5 GBP500 2.20% 12 months Sainsbury's Bank Extra Saver GBP1 1.80% N/A compares (at 30th Oct 2012) 129 car insurance brands and 100 home insurance brands 10 broadband providers and 18 energy providers 30 unsecured loan and 5 secured loan providers 62 mortgage lenders and 29 credit card providers 66 savings providers and 37 current account providers.

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