Here's a way to earn a sensational rate on your savings.
It's really infuriating when you come across a fantastic savings account, only to find -- unless you're already a customer -- it's beyond your reach.
As I explained in Earn Sky High Interest Rates On Your Savings, there's usually a price to pay for a storming return.
But the Halifax Regular Saver is different. The account guarantees a fixed rate of 10 per cent for a year and it's available to everyone. No need to open a current account with a dodgy interest rate or an investment plan you really don't need.
So how does it work?
In a nutshell, you can save between £25 and £500 a month and enjoy a fantastic 10 per cent interest for a year on up to £6,000 of your savings. You can run the account online or at a Halifax branch.
At the end of the year, your savings and interest are moved into one of six nominated accounts*, which you'll be asked to open at the same time as the regular saver. This is a bit of a snag for two reasons: one, you have the hassle of opening an extra account. And two, after the year is up, your savings and interest must be moved to this second account which pays interest at a much lower rate.
That said I still think it's a fantastic account for the next twelve months.
After the first year, the regular saver remains open and you can continue to pay into it if you wish, as long as the new fixed rate on offer for the following year is competitive.
On the downside, make any withdrawals or you close the account before the year is up, and the interest rate will revert to the Halifax Web Saver (without cash card) rate. To give you an idea, the tiered rates on this account are currently between 4.36% and 4.45%, which really pale in comparison.
Earn 12% On Your Savings -- With Strings Attached!
As an added bonus, by keeping an extra balance of £5,000 in your nominated Halifax savings account, you'll enjoy a further 2 per cent interest, taking the total to a hard to beat rate of 12 per cent.
How does it measure up?
I would say it compares very well with other regular savings accounts and it has the edge by being available to all savers. What's more, the generous rate easily tops a flurry of fixed rate savings bonds which have been launched over the last few weeks.
Regular savings rival, Alliance & Leicester, also offers a great rate of 12% on its Premier Regular Saver account, but to qualify you must open a Premier Current Account at the same time.
Switching your current account to meet the criteria for opening a savings account doesn't make sense unless it offers better terms than your existing current account. Otherwise, it's a pretty pointless exercise. For this reason, the Alliance & Leicester account is likely to be more attractive to people who are going to move their current account over anyway.
On top of that, the maximum monthly deposit with A&L is only £250, just half the amount you can pay into the Halifax account.
Drip-feeding your savings
But remember, with regular savings you won't earn interest on all of your savings from day one. In spite of the impressive rate, you'll be building up interest on a lower balance to begin with, which gradually steps up throughout the year. This means if you pay in the maximum allowed of £500 a month, you'll earn £325 in interest after twelve months.
So regular saving may not suit everyone. If you have a lump sum to stash away, you could be better off with a fixed rate bond such as FirstSave from First Bank of Nigeria which pays 7.10 per cent or you could earn 7 per cent with the HiSAVE Term Deposit from ICICI Bank. But, don't forget, you won't usually be able to get your hands on your cash until the bond has matured.
For easy access to your money, choose a market-leading instant access account instead, such as Kaupthing Edge Savings or Alliance & Leiciester eSaver, which both offer great rates of 6.50 per cent.
But the Halifax Regular Saver should be right up your street if you're happy to drip-feed your savings. Just make sure you get your skates on because the account must be up and running by 20th July 2008.
*The nominated account can be any one of the following:
- Halifax Websaver with card
- Halifax Guaranteed Saver
- Bank of Scotland Instant Access Savings Account
- Halifax Premium Savings Direct
- Halifax Saver Reward
- Halifax Instant Saver
More: Super Savings Accounts That Slaughter Inflation | Top Savings Accounts For New Starters | Choose the right account for you at The Motley Fool Savings Centre.