Savings accounts become more reliant on bonuses

Savings accounts have become much more reliant on the use of bonuses to inflate their headline rates, according to research from Investec Private Bank (‘Investec’). For balances of £25,000 or more, its findings reveal that on 27 October 2007, 116 accounts (12.98% of all accounts) used an average bonus of 0.61%. However, at 1 November 2008, the number using a bonus had increased to 158 (16.16% of all accounts) and the average bonus size of this had risen to 0.83%.

Linda McBain, head of Banking, Investec Private Bank, said: “Competition in the savings market is increasing and a growing number of accounts are using bonuses to inflate their rates to attract customers. However, savers need to be aware of the size, longevity and conditions of such offers and when they expire be prepared to switch if they feel that they are not being offered consistently attractive rates.”

Investec does not rely on bonuses to offer attractive returns. It aims to provide its clients with some of the most consistently competitive rates in the savings marketplace and to be as transparent as possible with them. The Investec High 5 account is unique because it is based on the rates paid by the top five ‘best buy’ accounts (those with the highest returns of interest). Its current rate is 4.47% gross AER. Given this commitment to track the best accounts in the market, clients can rest assured that they will consistently receive one of the best rates available and therefore don’t need to keep moving their money around.

The Investec High 5 Account, which requires a minimum investment of £25,000, pays a market leading rate because each week Moneyfacts take the five highest savings rates in the market, finds their mid-point and sets this as the rate for the High 5 account. This means that savers have the added assurance that the rate is set independently. Unlike other accounts, it does not rely on bonuses to inflate the rate.

To find out more about the Investec High 5 Account or Investec Private Bank’s other unique savings products, visit investechigh5.co.uk