Savings Accounts on The Up

Savings On The Up

He may have been the subject of a faintly humiliating self-promoting brochure recently but Michael Owen has bounced back, sealing a deal to join Premiership Champs Manchester United.

The former Newcastle striker will join the Reds if he passes a stringent fitness test but will face a 50 per cent pay cut for the privilege.

Everythingís relative though and a 50% pay cut is more than bearable when the salary you end up with is £50,000 a week!

Weíre not all that lucky though. The earnings that savers make have been slashed in the last 12 months, in many cases by considerably more than 50%. But with some providers introducing new products in recent weeks things are starting to look more promising.

MoneyExpet.com gives a rundown of whatís out there in the savings market.

A Grim 12 Months

Thereís no doubt that the last 12 months have been ones to forget for those reliant on the interest earned on savings. Pensioners in particular have been hard hit as rates on all types of accounts from instant access to regular products have sunk rapidly.

With a plummeting base rate ñ itís fallen 4.5% in the last year ñ a drop in savings rates was inevitable but providers were very quick indeed to pass on the cuts.

The average rate on an instant access account 12 months ago was around 3.3 per cent, with more than 50 accounts offering a rate over 6 per cent. Times have changed, and the average instant access account for savers with more than £1,000 now offers 1.0 per cent, with none getting anywhere near the 6 per cent mark of a year ago.

Consider The Options

Despite appearances, banks still want our cash and instant access accounts, over which they have less control, are bound to take the biggest hit in terms of the rates offered. If youíre able to plan your investment effectively you could do well to look for other types of savings accounts.

Notice accounts are an alternative to instant access savings accounts that allow you to withdraw money but, as the name suggests, only after giving due notice. This can vary from a period of 30 to as much as 120 days and with the average rate on these products still as low as 1 per cent this may require too much leg work for some.

Regular savings products, which require deposits usually on a monthly basis have been more robust. The average rate across the market may seem relatively low at 2.2 per cent but the likes of Halifax, Abbey, HSBC and Barclays all offer savings products with rates above 6% for those willing to make monthly contributions.

Term products are the final option. These involve locking your money in an account for a given period at a set rate. The terms vary from as little as one month to five years, though one, two, and three year deals tend to be the most popular. A one year Super Saver with Abbey offers a rate of 5.5%.

Better Things To Come?

The instant access savings market has been in a slump for the last 12 months but there are signs that things are picking up. Alliance & Leicester have recently launched an Online Saver at 3.15 per cent, and Sainsburyís Finance have upped their Internet Saver to 2.8 per cent. The Sainsburyís deal is only available for one month however so youíll need to move fast.

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