Good news for online savers

Andrew Hagger of Moneynet.co.uk comments on the latest savings launches: The internet savings market has been a hive of activity during the last ten days but Alliance & Leicester have now pipped their rivals to the number one best buy spot in the mainstream savings market with a new online account paying 3.15% gross/AER.

As has become common feature of late, the rate is boosted by a hefty bonus which in this instance falls away in August 2010.

The rate of 3.15% is paid from £1 and remains constant no matter what the balance is, however the underlying bonus decreases the higher the balance gets - for example at £1 the bonus portion is 2.65% whilst at the top end of the scale it reduces to 1.65% at £250,000 and above.

The account represents a great opportunity for customers to benefit from an excellent short term rate without any withdrawal restrictions or penalties.

However it is vital that savers make a diary note to review their account when the bonus element is withdrawn next year otherwise they could find themselves earning a poor rate of return and undoing all the benefit received in the first 12 months.

This account will make a good addition to a savings portfolio as a home for that ‘rainy day' money or emergency fund. It will sit well alongside a fixed rate bond and an ISA where you can obtain a higher return on your longer term serious savings.

On 3rd July Coventry Building Society are launching an online account specifically for customers aged over 50 and paying a market leading 3.25%gross/AER (fixed for 12 months).

The account offers instant access to your cash without penalty and is likely to prove a popular choice with the over 50 age group. There is no bonus with this product, but again it is essential to keep a close eye on the rate once the 12 month fix expires.

With a renewed appetite for retail savings now being seen across both fixed rate and instant access savings markets, I wouldn't be surprised to see more providers come out with rates to challenge these offers in the next couple of weeks.