Saving bonus rates beat savings rates

Tuesday, 03 November 2009 06:28

Average savings bonus rates are now higher than average savings rates.

Banks and building societies are offering bonus rates to push up their headline rates or limit the number of withdrawals - but after a year the bonus goes and the rate drops.

Research by MoneyExpert.com shows the average short-term bonus is now 0.9 per cent and the average rate is 0.7 per cent.

A year ago the average bonus was 0.2 per cent.

Some 21 per cent of accounts now offer bonuses - with the average amount to earn a bonus being £1,263.

Pierre Williams, head of research at MoneyExpert, said: "Beggars can't be choosers and given the low rates nowadays savers are effectively beggars when average rates are just 0.7 per cent.

"Bonuses are no bad thing and given the state of the market, savers may just have to play ball.

"Constantly moving account, though, may be getting very dull for those who simply want a steady return and access to their money."

On the instant access savings market, ING Direct and Sainsbury's Finance are offering 3.2 per cent - including an equivalent of a 2.7 per cent bonus as the accounts drop to 0.5 per cent after a year.

Alliance & Leicester's Online Saver has a tiered bonus up to 2.50 per cent in its 3.00 per cent, while Tesco is offering a 1.75 per cent bonus on its 3.00 per cent Internet Saver.

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