Alliance & Leicester raises eSaver rate

Alliance & Leicester has raised its eSaver rate

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Thursday, 04, Sep 2008 10:47

Alliance & Leicester has increased the interest rate on its online instant access eSaver to 6.56 per cent.

Savers who open a new account from September 3rd will benefit from a bonus of 0.94 per cent AER, payable until December 7th 2009, the bank said.

Although withdrawals can be made at any time, it is not designed for regular dipping in, as interest will be lost for any month in which a withdrawal is made.

However, the interest earned can go into the linked current account every month, without being treated as a withdrawal.

Hetal Parmar, manager for savings, said: "eSaver is designed like an old fashioned piggy bank - you can put money in whenever you like - but it is not for those who want to regularly dip into their savings.

"Having said that, interest is paid monthly, which is used by many existing eSaver customers to top up their monthly income and is ideal for 'silver surfers' looking to top up their pension each month, without risking their capital."

Kevin Mountford, head of savings at moneysupermarket.com, said: "This move by A&L means it leapfrogs Kaupthing to top of the easy access table, although this account does carry a bonus and some penalties for withdrawals."

This could mark a comeback for UK banks against foreign offerings such as ICICI and Kapthing, Mr Mountford said – although not for long, as A&L is set to be taken over by Spanish group Santander.

However, savers should not worry too much about this as A&L is clearly still keen to attract new business, Mr Mountford added.

"A&L presents a strong alternative in the short-term to the overseas operators that still tend to dominate top spots."

The new deal is an increase from 6.50 per cent AER, which eSaver has paid since it was first launched in November 2007. All existing eSaver customers will continue to benefit from the 6.50 per cent rate.