Supermarket price war spills into finance

In recent months the contest between the supermarkets has heated up, as they fight it out to offer lower priced goods to help us all through the recession.

Now the battle has moved from the supermarket shelves into the world of finance as both Tescos and Sainsbury's increase the rates for savers.

Whether its savings, credit cards, loans or life assurance, the supermarkets offer some highly competitive deals.

Michelle Slade, spokesperson for Moneyfacts.co.uk, commented: "Many consumers are disillusioned with traditional banks and instead are looking for an alternative provider for their finances.

"The combination of competitive deals and a strong brand that consumers already know and trust is a real winner for the supermarkets.

"Smaller providers are relying more heavily on their savings books to fund their lending activities and in turn are offering the most attractive savings rates.

"By comparison, many high street banks have a number of alternative ways of raising funding and tend to offer less attractive deals.

"Tesco has already announced its intention to open branches and to move into offering mortgages and possibly current accounts. It will be looking to make its mark in these new areas and is likely to enter the market with highly competitive deals."