Nationwide: Is savings account tracking competition a champion?
Nationwide today launched a savings account that promises to match the best buy accounts on the high street.
The Champion Saver account currently offers 2.80 per cent - including a 1.10 per cent bonus until January 31st 2011 on balances over £1,00.
The interest rate on the account will be set by average of the best instant access, limited access and notice accounts from Abbey, Barclays, Halifax, HSBC, Lloyds TSB, Northern Rock, NatWest and Royal Bank of Scotland.
The account has 60 days' notice - or 60 days' interest is lost.
The rate is calculated on the second Monday of the month and comes into effect on the first.
"As the interest rate is determined by the average of the top five from our basket of eight high street providers, customers can rest assured that they will receive great long term value without the need for checking interest rates themselves," said Andy Hutchinson, Nationwide head of savings.
"To help savers manage their money more effectively, we will write to customers when their introductory bonuses are due to end."
The account follows the model of the Investec High 5 account, which pays the mid point of the five highest savings accounts in the market, and not just the high street providers.
It currently offers 3.17 per cent, but it requires a minimum investment of £25,000.
Both accounts use Moneyfacts.co.uk best buy tables to monitor the competition.
Moneyfacts tables show the best notice accounts on the market with bonuses start at 3.15 per cent - ahead of the Nationwide Champion offer.
This is because the best buy tables are currently being led by smaller building societies - not included in Nationwide's high street comparison.
Andrew Hagger of Moneynet.co.uk explained while the account may sound like a good move, it is important to bear in mind the 60 days' notice required.
He points to Alliance & Leicester's instant access account at 3.15 per cent, ING Instant Access at 3.00 per cent and the Sainsbury's Bank internet saver at 2.90 per cent.
"Whilst it's not the same sort of product, it's also worth bearing in mind that if you know you can tie your cash up for 12 months as opposed to opting for 60 days notice you can get 3.85 per cent from Post Office and 3.75 per cent from Derbyshire Building Society for a 12 month fixed rate bond. For a 9 month fix you can secure 3.21 per cent from Bank of Cyprus UK," Mr Hagger said.
"So even though the Champion saver will ensure you get a better deal than many of the mundane savings offerings on the high street, it's not a champion in the true sense of the word as there are better and in some cases more flexible options available."
| Daniel's view Getting a strong rate on your savings account is very much a mission these days. It seems the Bank of England may well keep interest rates as they are up to the end of the year, and low beyond that, which makes searching for an account paying over five per cent a thing fo the past for a while. The key measure is to stay on top and make sure you take advantage of saving bonuses and then switch when rates drop and the teaser runs out. The first stop is as always having an ISA, so you are not paying the taxman. The problem with the Champion account at Nationwide is fails to track the highest rates, just the big players. |
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