Don't be put off by Northern Rock's recent troubles. Saving still makes a great deal of sense, especially in these table-topping accounts.
The short-term shakes at Northern Rock are over, largely because the government stepped in to guarantee every penny of savers' money. Although Northern Rock savers should be relieved, I'm sure that many other savers are feeling wary after the events of the past week. However, I'd like to reassure you of three things:
- 1. That saving part of your earnings each month still makes perfect sense. The real danger comes from constantly allowing your spending to exceed your income!
- 2. That British banks and building societies are still secure homes for your spare cash. If a bank really did get into trouble, then the Bank of England would step in with emergency help. In any event, Northern Rock was still quite solvent, even after £2 billion of withdrawals. If things worsened, the Bank of England would doubtless order one of the huge banks to take over its struggling rival. Likewise, the Building Societies' Association would ask one of the big boys to come to the aid of a weaker society.
- 3. That interest rates on savings accounts look quite tempting at the moment. With the Bank of England's base rate at a six-year high of 5.75%, today's savers are being offered some of the best savings rates since the turn of the century. Indeed, it's possible to earn up to 7% a year on your savings, which compares well with the 2.9% annual income on offer from the FTSE All-Share index.
So, where would you go to find an everyday savings account which pays a market-beating rate of interest, with no strings attached and no nasty withdrawal penalties? Fortunately, I've done the spadework for you, thanks to the Fool's independent, unbiased savings search engine. To make things easy, I've assumed that you have at least £250 to save (or transfer from another savings account). Also, you want easy access to your emergency fund, nest egg, or rainy-day fund, so I'll exclude notice and fixed-term accounts. Here are the pick of the bunch:
Best Buy easy-access savings accounts for £250+
Account | Interest | Minimum | Rate guarantee |
|---|---|---|---|
6.40 | 1 | Rate guaranteed to at least equal base rate until 01/01/09. | |
Northern Rock Tracker Online | 6.31 | 1 | Rate includes a 1.06% bonus for a year. Rate guaranteed to be no lower than 0.50% below base rate until further notice. |
6.30 | 1 | Rate guaranteed to exceed base rate by at least 0.25% to 31/12/07. | |
Sainsbury's Bank | 6.25 | 1 | Until 31/12/10, the rate will be higher than the average rate paid by over 100 equivalent accounts. |
6.20 | 250 | Rate guaranteed to exceed base rate by at least 0.25% to 01/10/09 and then at least match base rate to 01/10/11. |
By the way, if you're over fifty (or sixty, in some cases), then you also have access to special savings accounts which are aimed at senior savers. Chief among these are the Coventry BS Sixty-Plus eSave 2 (for 60+ savers), paying 6.40% AER fixed for a year; and the Northern Rock Silver Savings Online (for 50+ savers), paying 6.31% AER.
So, there you have it: high rates of interest, easy access and no withdrawal penalties. What more could you want from a savings account? Over and out!
More: Find ace accounts in our savings centre | A Supersafe Home For Your Savings | Great News From The Credit Crunch