Banking/Savings Section

7% Savings Deals Are Ending - Where To Put Your Money Now

October 2005

For many sharp and switched on savers a year is nearly up. So money they've had deposited at a great 7% interest rate with Abbey and Halifax is coming to an end. So what to do and where to put your money now?

There are 4 main options -

1) Do Nothing

• Abbey customers will automatically be switched to its Monthly Saver Account which yields a still respectable 4.75%
• You must save at least £20 a month but the account does have a nasty sting in its tail
• If you withdraw money then the account only pays 0.75% for that month

• Halifax clients will be asked to move their money to one of 4 different accounts
• The 'best' of these 4 accounts the Premium Savings Direct pays a pathetic 3.4%
• Halifax therefore plays the old marketing trick of offering great rates to attract money then dropping the rate considerably because all the banks know that only a certain percentage of clients will actually move

2) Move Your Money To Another Account With Abbey/Halifax

• Abbey offers a 1 year eBond paying 4.35% (this is not good)
• It also has an eSaver account paying 4.85% (min deposit £1) up to 5.15% on £200,000+ (this is good)
• Note that Abbey has since launched another regular-saver account paying 6% but this is only available if you've got an Abbey personal account

• Halifax clients can continue to get 7% from their accounts after the initial 12 months ends, but they must move their original capital to another Halifax savings account (Get your calculators out here and work out what the total yield would be, we suspect that it's a trap and customers will be able to get much better elsewhere)

3) Move Your Current Account To Another Bank To Pick Up a Top Yielding Savings Account

• If you want a great rate then consider moving your current account to another bank
• This is because many banks now offer top paying savings accounts but only if you also bank in the main with them
• For example HSBC has a Regular Savings account that pays 8%
• The Norwich & Peterborough Gold Savings account also pays 8% for those with current accounts
• If you don't want to move current account banks then check out the Leeds Building Society which pays 7% but we have not investigated this and there are sure to be restrictions, like only a maximum amount can be deposited per month

4) Move Your Savings To A Totally Separate Bank And/Or An ISA

• If you don't already have an cash ISA you should get one
• ISAs pay around 5% a year on a maximum of £3,000 per annum (min investment usually £1) and are 100% tax-free
• The Portman Building Society pays a nice 5.25% and the Halifax pays 5%
• If you've already used your ISA allowance of £3,000 then have a look at the Birmingham Midshires 1 year bond yielding 5.05% on lump sum investments
• As for regular savings accounts without any restrictions then don't forget the Cahoot Bonus Savings Account which pays 5.25% for 6 months and then 4.75%
• First Direct is paying 5% on its instant savings account which is a great deal
• ING Direct has always been a good account and still yields 4.75% with great internet access

Summary

Our advice on how to work out where to put your money is simple.

Make sure you've got an ISA for starters then work out just how important instant access to your money is (without of course any financial penalties). Then you'll have a pretty good idea which accounts are best suited to you, so go for the best payers. Beware though of locking your money up for anymore than 2 years because competition is so hot for your money that financial institutions will continue to offer great deals for the foreseeable future. Therefore flexibility is one of the keys to getting the best returns for your money.

See Also

• First Direct pays 5.00% instant access
• Cahoot Bonus Savings Account
• Abbey eSaver
• ING Direct pays 4.75%, minimum £1 deposit
• Find's List of Saving Account Links