Savings accounts designed for the 'silver surfer' may be good for savers over 50, but do they always offer the best deals?
The terms `silver surfers' and `grey surfers' have cropped up on the savings radar rather a lot lately.
Generally referring to seasoned web surfers aged over 50, mature savers have become more appealing to savings providers over the years, with many more banks and building societies looking to tap into this market.
Silver savers are a valuable group, as not only are they more likely to be enticed by the relatively safe haven of cash compared to the volatility of the stock market, but many have paid off large debts such as their mortgage and have more disposable income to hand.
Sterling Surfers
However, although older generations are traditionally associated with preferring in-branch transactions, the view that they don't like managing their savings online is a misconception.
According to Ofcom's analysis of the communications market last year, mature surfers are becoming increasingly savvy when it comes to the net. One quarter of all Brits using the internet are aged over 50, with the group accounting for 30% of total time spent online.
In addition, 16% of over 65s use the web, with this group spending an average of 42 hours online every month, more than any other age group.
With the base rate shrinking to 5.25% in just over three months, this is a good time to root out a good deal. Perhaps it's time for silver savers to jump on their surfboards and make the most of the perks available to a vintage saver.
Here are a few of the best accounts designed for the over 50s. All pay annual interest and can be operated online:
Institution and Account | Interest Rate (AER) | Minimum Deposit | Ways To Operate Account | Comments |
|---|---|---|---|---|
Coventry Building Society 50 Plus eSave | 6.4% | £1 | Online | Rate fixed for first year, and then guaranteed to be no lower than the base rate for six months. |
6.25% | £1 | Online | Rate guaranteed to be no lower than the base rate until 31 January 2010. | |
Abbey 50+ Saver Issue 4 | 5.85% | £1 | Post, Telephone, Online | Rate includes 1.1% bonus for 12 months. |
5.83% | £1 | Online | Rate guaranteed to be 0.55% above base rate for six months, then 0.45% above base rate for the next 6 months. Then equal to base rate in year two and 0.25% below it in year three and beyond. | |
Newcastle Building Society Newcastle 50+ Issue 4 | 5.55% | £500 | Branch, Telephone, Post, Online | Fixed rate to 5/6/09. Rate guaranteed to be no lower than 0.5% below base rate from 6/6/09. Early access during fixed rate period incurs 45 day loss of interest. |
Source: Moneyfacts
As you can see, there are some tasty rates out there for the over 50s.
Coventry Building Society lies in top spot, offering a catch-free rate of 6.4% guaranteed for the first year.
Eager to entice deposits from customers, newly nationalised Northern Rock is also targeting the over 50s market, offering 6.25% to mature savers.
However, it's worth pointing out that just because these accounts are packaged for a particular group, they are not necessarily the best products overall.
For example, Saga's online savings account currently pays 5.75% for the first six months. However, after this period, it gets a little more complicated. After six months, the interest rate slips by 0.1% for the next six months, then slips again to match the base rate in year two. In year three and beyond, the rates are lowered again to 0.25% below base rate.
In fact, many of the accounts listed above include introductory bonuses which relegate them to the bottom of the savings league-table once the inital rate expires.
Playing The Field
So, if you want a competitive savings account without the complications, it's important to broaden your horizons and not restrict yourself to just one market.
For instance, Kaupthing Edge offers a great interest rate of 6.50%, with the account available to everyone, irrespective of age.
The rate also comes with a guarantee that it will be at least 0.30% higher than the Bank of England base rate until 1 February 2012.
Bonding With Your Cash
If you don't mind tying up your money for a while, there are also a number of fixed term bonds on the market.
If you have at least £5,000 to save, Kaupthing Edge also has a 12 month bond paying a gigantic 6.86%.
In addition, Icesave pays 6.76% from £1,000 on its six month bond. Alternatively, if you're ethically minded, or simply don't want to invest in the Icelandic pie, the Co-op bank pays 6.62% on balances from £2,000 on its Fixed Term Deposit, as well as giving you the peace of mind that your money is ethically invested.
So, whether you're young, old - or neither of the above, the important thing to remember is not to just go for the gimmick.
After all, having a savings account designed especially for you may be nice, but you may well get a better deal by shopping around.
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