Rising interest rates equal bigger returns for British savers. In particular, savings rates for children and senior citizens are climbing.
Here's an old saying, but a good one: You're never too old or too young to start saving.
Personally, I didn't get the savings bug until I was in my early thirties, but I've always been something of a late developer. Indeed, throughout my early adulthood, I didn't save a bean. Alas, all I did was borrow and spend recklessly, with no regard for tomorrow -- a habit that the rest of the UK seems to have adopted nowadays!
Still, I'm pleased that the Bank of England has raised its base rate twice this year. The base rate went up by 0.25% in August and the same amount last month, but was held at 5% a year in today's announcement from the bank's Monetary Policy Committee.
Of course, any increase in the base rate leads to a round of mortgage- and savings-rate adjustments by banks and building societies. Amid the commotion following the last base-rate rise on 9 November, one pattern has emerged: the providers of savings accounts have been rewarding younger and older savers with better deals.
Good news for young savers
Although some savings providers have been passing on the latest 0.25% base-rate rise in full, others have held something back to boost their profits. However, some young and old savers have benefited from bigger rate hikes. For example, Nationwide BS increased the rate on its cash Child Trust Fund (CTF) by 0.3% a year, and Hanley Economic BS added 0.5% to its CTF rate. For the record, here are the highest-paying cash Child Trust Funds:
Best Buy cash Child Trust Funds
| Building society | Interest rate (% a year) | Minimum deposit (£) | Minimum additional deposit (£) |
|---|---|---|---|
| Britannia BS | *6.50 | 250 | 1 |
| Yorkshire BS | *6.25 | 250 | None |
| Skipton BS | 5.55 | 250 | 10 |
| Chorley & District BS | 5.50 | 250 | None |
| Ipswich BS | 5.40 | 250 | 1 |
| Nationwide BS | 5.30 | 250 | 1 |
Source: Moneyfacts, 05/12/06
* Includes an introductory bonus for a limited period.
Although Ipswich BS only passed on a 0.1% rise to junior savers in its Child Trust Fund, most CTF providers have passed on at least the full 0.25% increase, which is better than the hikes for the savings market as a whole.
Good news for senior savers
In addition, the market for savings accounts for the over-fifties is really beginning to boom, with a total of 36 accounts aimed at senior savers. (By the way, I prefer senior citizens or the American-ish seniors to the outdated old-age pensioners. If my wife's gran doesn't feel elderly at over ninety, then who does these days?)
Here are the top-paying accounts for the over-fifties, again courtesy of our friends at Moneyfacts:
Best Buy specialist savings accounts for the over-fifties
| Account | Minimum age (years) | Interest rate (% gross) | Minimum/ maximum deposit (£) | Notice period |
|---|---|---|---|---|
| Coventry BS Sixty-Plus Saver Issue 2 | 60 | *5.75 | 500 / 250,000 | Instant |
| Coventry BS Sixty-Plus Notice | 60 | *5.60 | 10,000 / 250,000 | 60 days |
| Northern Rock Silver Savings Online** | 50 | 5.46 | 1 / 2,000,000 | None |
| Stroud & Swindon BS Platinum 50 Saver | 50 | *5.40 | 5,000 / 500,000 | 30 days |
| Market Harborough BS onthedot Sixty+ Surfer** | 60 | 5.20 | 1 / 100,000 | None |
| Ipswich BS Diamond Plus Issue 3 | 60 | *5.15 | 2,500 / 100,000 | 60 days |
* Includes an introductory bonus for a limited period.
** Operated by Internet.
Finally, if you'd like to earn a higher rate of interest on your existing savings, or fancy a Best Buy savings account, be sure to shop around before making up your mind. Only by searching the entire market (including tax-free savings accounts such as cash mini-ISAs) can you be sure that you've found a table-topping deal!
More: Use the Fool to find top-notch savings accounts and investments!