Barclays is buying ING Direct but if you're not happy becoming part of the high street giant, what other options are there?
In a shock announcement this week, Barclays announced it was purchasing ING Direct UK in a deal which will see the high street bank take on £10.9bn in savings deposits.
The deal has sparked some concern as many experts and consumers believe that because Barclays already has a big share of the UK banking market, it shouldn’t be allowed to buy ING.
Existing customers have been told they don’t need to panic as nothing will change until the deal is finalised. However, many disgruntled savers who aren’t willing to move their money over to Barclays may now be looking for alternative options on the market.
The deal
ING Direct has been a big player in the savings market for quite some time and is frequently at the top of our best buy tables.
Now Barclays is to take over these accounts it’s unclear what will happen to the rates available. Until everything’s confirmed it’s unlikely any more details will be released.
The main criticisms of the deal are around the lack of competition on the UK high street. If a newcomer, such as Metro Bank or Tesco Bank, had bought ING it would have given consumers more choice.
Financial protection
Each UK bank is covered by the Financial Services Compensation Scheme (FSCS) which protects up to £85,000 of money in any one institution. However, this only covers institutions with their own banking licence, and generally those in an umbrella group, such as Lloyds TSB, are only covered under one licence.
It’s unclear what will happen with the Barclays/ING deal, but at the moment if, for example, you had £80,000 in a Barclays account and £80,000 in an ING account and the two merged under the same licence, only £85,000 of this money would be protected, should the merged company go bust.
What other options are there?
As well as offering mortgages, ING is a firm favourite in the savings market and regularly brings out market-leading accounts.
Instant access savings
When it comes to the instant-access market, ING’s Direct Savings Account pays 2.7% and allows unlimited withdrawals and deposits and you can open an account with £1. However, this rate has dropped sharply from 3.05% in August.
Few accounts beat this rate. One such account is the Coventry Building Society's Family Saver account which pays 3% including a 1% bonus for 12 months. However, you must have a family to be eligible for this account, and you must pay your Child Benefit into the account. (You can pay in other savings too if you wish.)
Two other options are the Allied Irish Bank Easy Access Reward Account Issue 2 and the Derbyshire NetSaver instant access account.
The Allied Irish acccount pays 2.8% and has a minimum deposit of £1. However, you can only make four penalty-free withdrawals a year. The Derbyshire account pays 2.75% and has a £1000 minimum deposit. It includes a bonus of 1.75%.
Fixed rate savings
ING has a one year fixed rate account paying 2.75% on a minimum balance of £1,000 but you can’t access your money during this time without losing interest.
You can view all the savings accounts on offer in our comparison charts but it’s quite easy to find a better rate when it comes to 12-month accounts. M&S Bank pays 3.10% on its one year account which requires a balance of £500 to open, while United Bank UK has a similar deal offering interest of 3.05% but you need to put at least £1,000 away.
There are also fixed rate accounts paying 3% on offer from both Bank of Cyprus UK and Allied Irish Bank (GB) which ask for £1,000 and £2,000 to open respectively.
Cash ISAs
For those savers with an ING cash ISA, this is paying out 2.80% at the moment and you can take your money out whenever you need to. The benefit of this, being a cash ISA, is that the money saved within it is tax free – up to the limit of £5,640 this year.
An alternative is the Post Office instant access cash ISA which pays 3.01% on a starting balance of £100. There are also accounts from M&S Bank and Teachers BS which pay 3% on anything from £100.
More on savings:
The top fixed rate savings bonds