Get Extra Rewards For Saving!

We look at a savings account that combines a good interest rate with some nifty bonuses.

Recent events have left the savings market looking rather sticky at the moment. With inflation up to 5.2% and interest rates down to 4.5%, savers have now been left with the double dilemma of both the safety of their savings and the returns they're getting on their cash.

However, supermarket giant Tesco has launched a new incentive in an attempt to get savers smiling again. From now until 12^th November, if you open a Tesco savings account and deposit a minimum of £1,000, you'll qualify for at least 500 Tesco Clubcard points.

Buy one, get four free

These 500 points could get you £5 off your weekly shop. However, you could make them go even further by exchanging them for `Clubcard deals tokens', which give you up to four times your normal spending power on deals including days out, theatre offers and magazine subscriptions.

So, according to Tesco, the maximum reward of 2,000 Clubcard points could be worth up to £80 in Clubcard deals.

You could also exchange your points for rewards from the popular Airmiles scheme, with every £2.50 worth of Clubcard vouchers worth 60 miles. Unlike similar schemes, points redeemed for flights include all taxes and fees, making it one of the best travel reward schemes around.

Rates rule

Aside from these perks, there are also some potentially great returns to be had.

For example, Tesco's Internet Saver currently pays a generous 6.5% AER on balances up to £100,000, though this does include a 1.5% bonus for 12 months from account opening. This account can only be operated online.

If you'd prefer to manage your money in your local Tesco store or over the phone, its Instant Access savings account may be a better option. However, this account doesn't come with an introductory bonus, and pays tiered interest rates from 3.85% AER on balances from £1 to £2,999, up to 5% for balances over £50,000.

Here's a guide to the rewards up for grabs:

As you can see from the table, in order to earn the maximum reward of 2,000 points, you have to deposit at least £50,000, which for most of us isn't exactly pocket change.

However, you only need to have the funds in the account on the qualifying date of 30^th November to be eligible for the bonus points.

So, if you're the kind of person who prefers not to have all your eggs in one basket - but still want to make the most of the offer, you can transfer all or part of your money elsewhere from 1^st December and still qualify for the bonus points, which will be paid to your Clubcard account in February 2009.

Consistency vs. perks

It's worth bearing in mind that Tesco is not the only supermarket to venture into the savings market. For example, rival Sainsbury's Bank also has its finger in the savings pie, and its Internet Saver account currently pays a flat rate of 5% AER on balances from £1.

The account doesn't come wrapped with any bonus rates or extra perks. However, it is still competitive considering the Bank of England Base rate currently stands at 4.5%.

Plus, according to Moneyfacts, Sainsbury's Internet Saver is also the most consistent internet savings account over the past three years. With further rate cuts on the horizon, perhaps it's time to think about accounts that remain robust during an interest rate downturn.

And finally.

For those worried about safety, both institutions are separately licensed by the Financial Services Authority and each provides £50,000 protection under the Financial Services Compensation Scheme.

Wherever you decide to stash your cash, it's important to remember not to put all your eggs in one basket. That said, supermarket banks are pretty competitive at the moment, so why not check-out a great savings deal alongside those traditional purchases that make up your weekly shop?