Watch The Marketing Catch With Some Best Buy Savings Accounts
September 2005
The Newcastle Building Society has just launched on paper what looks like to be a Best Buy Savings Account, paying 5.02% per annum with no restrictions of withdrawing money. However like many of the best buy accounts it comes with a small string attached, the savings rate includes a bonus payment of 0.87% for the first 6 months.
- Minimum opening balance is £1
- It's an Online account - 24 hour access
- NO limits on the amount of withdrawals (this is an excellent feature)
- Newcastlenet
Open an account today and get a good rate, but if you leave your money in for longer than 6 months you'd perhaps be better off going with a savings account that pays a lesser interest rate today, but will likely not move that rate unless base rates move.
So like with many personal finance products it always pays to do a touch of research first.
Northern Rock Also Plays The Intro-Bonus Game
- The Northern Rock Tracker Online Account pays 5.01% pa
- But comes with a 0.71% introductory bonus for the first 6 months (from when an account is opened)
- The rate then drops to 4.3% which is easily beaten by many different savings account
- Northern Rock's Tracker Online account
Both financial institutions cannot really be faulted for these type of catches because they make the facts very plain in their marketing and website (incidentally, Northern Rock's website is very poor indeed, many people have complained that it's virtually impossible to signup to any online accounts, in our opinion they should employ a 'web usability' expert because they must be losing business)
Should We Open Savings Accounts With Bonus Offers
This all depends on how financially organised you are. If you're prepared to open an account, pay money in and then transfer money after the 6 month introductory period has ended then these accounts are well worth it.
However, if you're the type of person that either forgets to do things or can't be bothered then it's a better strategy to open an account with a high savings rate that is unlikely to change (unless base rates do). These include -
Summary
The banks and building societies know what they're doing by paying these intro bonuses. They know full well that many savers will be attracted to the rate and the majority will continue to hold their money in the account when the bonus ends. It's simply a way to attract and market their business.
Play them at their own game if you're organised and take satisfaction of having your money earning the maximum or near maximum rate possible. Otherwise stick with what the market refers to as 'stable accounts', those banks which pay excellent rates of interest (without bonuses) combined with a history of keeping the savings rate constant, ING Direct is one such example.
See Also
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