New savings war to benefit savers

Customers are set to cash in as an internet savings war breaks out among top companies with several firms offering rates above six per cent, predicts MoneyExpert.com. The independent financial comparison website says firms continue to react to Bank of England base rate rises in a bid to capture more customers.

The prediction comes after Sainsbury’s Bank announced it would be increasing the interest rate on its Internet Saver from 5.75% to 6.0% despite no change in the base rate this month. MoneyExpert.com analysis shows nine per cent of all instant access savings products pay out at 0.25% above the current Bank of England base rate for £1/£10.

Sean Gardner, Chief Executive of MoneyExpert.com said: “The days of the six per cent savings account seem a long time ago but we believe they’re set to return with a vengeance over the coming weeks.

“It’s not really been since 2000 – 2001 that savers have had a selection of savings accounts to choose from that have offered 6% or more. There have been a number of new entrants to the savings market offering market-leading rates and this, coupled with a further increase in the Bank of England base rate being factored in by the savings industry, has meant that we now have a select number of accounts paying 6% or more.”

However, MoneyExpert.com warns savers to read the small print and understand the terms and conditions involved with many of the top accounts as some offers which look too good to be true are just that.

Sean Gardner said: “There are a number of attractive accounts but many of these rely on short-term bonuses or require huge deposits. In choosing an account, you need to look at its track record. The Sainsbury’s Internet Saver account has paid above Bank of England base rate since it was launched at the beginning of 2005. If it is a new account, look for any promises related to future payments.

“For example, the Icesave account from Landsbanki, which accepts balances of £250 or more, pays 5.95% and promises to pay above the Bank of England base rate until October 2009 and to match it for a further two years.”