Silver savers: Over 50s find best rates?
Savings accounts and bonds for the over 50s are once again among the best around - as silver surfers look to find the best deals.
And from October 6th, the over 50s will also benefit from new ISA rules raising the cash limit from £7,200 to £10,200, which will no doubt lead to a whole raft of new ISAs aimed exclusively to this age bracket.
But do these accounts offer anything better than the rest of the market, and are there any alternatives?
Sarah Routledge takes a look at the ever-expanding silver savings market.
"When aiming a product at a smaller group, you can offer a higher rate, because you don't have such a high take-up," Andrew Hagger of Moneynet.co.uk explains.
"Also, this is an age group that tends to have more disposable income to save, as they have probably paid off their mortgage."
Michelle Slade, from Moneyfacts, says: "Over 50s have built up a reasonable amount of savings, so banks target them for the best deals.
"Over the last few months, they have not been as lucrative, but there are still a few good deals out there."
The Building Societies Association (BSA) claims 'silver saver' accounts recognise that older people have saving needs and requirements that often focus on simplicity, reliability, regularity of payment, and supplementing other - often fixed - sources of income.
"They are beneficial to older customers who have less opportunity to build their savings. They are also rewarding, in many cases, long-term loyalty," says Chris Lawrenson, head of legal services at the BSA.
Although high interest rates are the top priority for most savers, those approaching retirement are particularly anxious to secure a good rate of return as the interest payments often represent part of their income.
"But you have to be careful," Mr Hagger warns.
"Just because it is a targeted account, it doesn't mean it is the best."
Coventry Building Society 50 Plus eSave
The 50 Plus eSave account pays 3.25 per cent, fixed for 12 months from the date of individual account opening and allows unlimited, penalty free access.
This interest rate is market-leading for an instant access account and may be a good solution for short-term savers who are reluctant to lock their money away in a low-interest rate climate.
"We were one of the first to design products for this age group," says Richard Field, spokesperson for the society.
"Savers are looking for a good rate but one backed by great service from an organisation that is secure and they can trust.
"Previous issues of 50 Plus eSave have proved very popular - it is a very strong combination of great rate and easy access."
In terms of instant access, Coventry is "way out ahead" of other providers, according to Mr Hagger.
"The new deal from Coventry is very good and I wonder how long it will be around," he adds.
However, the interest is only fixed for a year, savers must make a note in their diary for 12 months' time, when the account will revert to a less than inspiring rate.
West Bromwich High Income - Over 65s account
"The West Bromwich High Income - Over 65s account is a good alternative," says Ms Slade.
Offering 3.09 per cent interest at the highest tier - £100,000-£250,000 - this account is only available to the over 65s and requires 90 days notice for withdrawals - but there is no penalty, so cash does not have to be locked up for years.
The minimum investment is £5,000, the maximum is £250,000 and the account is operated by telephone or by post.
However, savers must bear in mind that anything more than £50,000 in one account will not be covered under the Financial Service Compensation Scheme (FSCS).
Saga Fixed Rate Savings Accounts
Saga is offering up to 4.35 per cent on a four-year fixed-rate savings account, which compares favourably with other products in this sector.
The account is available from just £1, and is designed for the over 50s. Withdrawals on this account are allowed, although there is a penalty of 90 days loss of interest on the amount withdrawn.
A two-year fixed-rate also has a competitive rate, at 4.15 per cent.
As an alternative, Birmingham Midshires is offering 4.25 per cent for a two-year fixed-rate bond, which can be operated by phone or by post, and 4.35 per cent on a three-year bond.
Alliance & Leicester Premier 50 account
Alliance & Leicester's Premier 50 current account is tailored to the over 50s and has an enticing rate of six per cent, fixed for one year, but carries a monthly fee of £10.
"The rate is one of the top rates at the moment. Obviously, you do have to weigh up the £10 a month you are paying. It's a reasonable deal, but it depends on your circumstances," says Ms Slade.
The main benefits of the account are the six per cent interest earned on balances up to £2,500, fixed for one year, a fee-free overdraft for 12 months with a maximum of £2,000, and annual worldwide travel insurance up to age 79.
The higher age limit on the travel insurance could be of particular benefit, as many travel policies will exclude travellers over the age of 65.
In addition, the first three months are free, so the account will cost £90 for the first year. If you think you are likely to use all the benefits, this is a good account.
If this is unlikely, and you can afford to deposit in £500 a month, you could take advantage of Alliance & Leicester's Premier Current Account or Premier Direct Account, which offer some of the same benefits without a charge.
Equality Bill
The high interest rates and tailored benefits on over 50s accounts are likely to be beneficial to many in this age group, although savers should always check an over 50s account against other products on the market to make sure they are getting the most for their money.
But a proposed law has put jepardised these products, according to the BSA.
"There is still a risk to 'silver saver' products, despite the fact that - at a time of historically low savings rates - they help elderly people, many of whom have to live off their savings," says Mr Lawrenson.
The Equality Bill, which is making its way through Parliament, could make certain 'discriminatory' practices in the financial industry illegal - such as excluding the over 65s from travel insurance.
But it could also outlaw accounts that target over 50s, as well as potentially making equity release illegal.
The BSA is currently campaigning against the loss of 'silver saver' accounts and is involved in the government's public consultation on the issue.
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