Sainsbury’s Internet Saver account jumps to 6%

Despite there being no change to the Bank of England base rate this month, Sainsbury’s Bank has announced that it is to increase the interest rate on its Internet Saver to 6%.

The new rate will take effect immediately. For balances of £1 or more, the Internet Saver is now one of only eight accounts paying 6% or more). Unlike some other top paying accounts the Internet Saver does not rely on short-term bonuses and has no restrictive terms and conditions such as limiting the number of times you can access your money.

New research commissioned by Sainsbury’s Bank reveals that for balances of £1,000, between January 2005 and the end of May 2007, the Internet Saver was among only 7% of instant/easy access accounts to have at least matched or bettered the overall increase (0.75%) in the Bank of England base rate during this period. Since Sainsbury’s Internet Saver's launch in January 2005 until now, the account has increased its interest rates from 5% to 6% AER.

Peter Wood, Head of Sainsbury's Savings, commented: “We are obviously delighted to be announcing this fantastic new rate on our Internet Saver. The internet savings market has become increasingly competitive, and there are some great rates available. We're proud to be able to offer such a superb rate with unlimited access to funds. Six per cent is the latest high point of in an impressive track record.

"With so many accounts in the market, savers need to think about which savings account best suits their needs, whether that's benefiting from a short term bonus or being able to access their funds without any penalties. Our Internet Saver is ideal for those savers who want to receive a great rate but also want to have regular access to their cash without any restrictions."

Growing trend in the savings market

Sainsbury’s Bank's savings research highlights that in a highly competitive savings market, savers need to think carefully about which account suits them best. It has uncovered a growing trend for instant/easy access accounts to carry either bonuses or terms and conditions which can penalise savers for making withdrawals.

The number of instant/easy access accounts to carry a bonus has increased by 45% between January 2005 and May 2007. Similarly, the number of instant/easy access accounts that limit the number of withdrawals that customers can make or apply penalties for withdrawing money has increased by 26%. There has also been a 125% increase in the number of accounts that are only available to people aged 50 and over and a 78% rise in the number that are only available to existing customers.

Peter Wood said: “There are a number of attractive accounts for savers to choose from, but it is important to understand the terms and conditions. If you don’t, you could be in for a surprise when your rate drops or your bonus expires."

Sainsbury’s Bank offers three savings accounts, all of which have a guarantee to pay above the market average rate of interest until the end of 2010.