Sainsbury’s throws down the gauntlet in the Internet savings market

Andrew Hagger, Head of news and press at Moneyfacts.co.uk, looks at the deal that may shake up the already competitive Internet savings market.

“It’s unusual to come across a market leading interest rate that doesn’t have any unpleasant baggage hidden within the small print. The increased rate of 6% on offer from Sainsbury’s is not only welcome news for prospective new customers but, equally important, it is also being passed on to their existing customer base.

“At the time of writing, the 6% interest rate (AER/gross p.a.) puts the Internet Saver account at the top of the Moneyfacts.co.uk best buys. The account can be opened from as little as £1 and there are no restrictions on the number of withdrawals permitted, no withdrawal penalties – basically it’s what you see is what you get

“Icesave from Landesbanki has dominated the online savings market for the last eight months and it will be interesting to see if this offer from Sainsbury’s provokes a response from them or other providers.

“It seems that Sainsbury’s are doing a bit more than just dipping their toe in the water with this deal. For the first time the product will be advertised throughout their network of supermarket outlets to an already ‘brand loyal’ 17 million shoppers. Combined with national TV and radio advertising, this account represents potentially formidable opposition to the existing high flyers operating in this product sector, which can only be good news for the UK savings market as a whole.”