Yorkshire’s 2010 Christmas saver account could be a new year bargain
These recently launched savings accounts offer good value in a low-rate market – but they may not be around for long
Apart from going mad in the sales, January is traditionally a time to start squirrelling money away after the festive blowout.
Savings accounts have hardly been enticing, but last week saw some launches that look good value in a low-rate market.
The first is from the Yorkshire building society, which has already turned its thoughts to next Christmas. Its 2010 Christmas Saver is paying a fixed 3.5% gross, which, it says, is “aimed at helping people spread the cost of next year’s festive season” – though, of course, you don’t have to spend it on festivities.
The rate is fixed until 1 December, which is also the first opportunity you’ll have to withdraw any money invested. Interest is also paid on this date. The rate is better than almost every other account on the market. The downsides are, you can only invest up to £1,200, though this can be monthly or in a lump sum, and you have to go to a Yorkshire or Barnsley branch to open the account.
Andrew Hagger of price comparison website Moneynet is considering investing. “This is one of those accounts I suspect won’t be available for very long. I wouldn’t be surprised if it has disappeared by the end of the month,” he says.
The other launch worth considering comes from the Coventry. It is a postal account, paying 3.3%, with a minimum initial investment of £1,000. The rate is variable, so could change, and it does include a 1.3% bonus for 12 months. However, it is still good value when you consider that the average rate on an instant access account is 0.89%, according to data provider Defaqto. It allows four withdrawals a year, which have to be a minimum of £1,000 a time.
“Over the last few weeks the highest available easy-access savings rates have been reduced, so it is a welcome move to see the Coventry bucking the trend,” says David Black of Defaqto. “Although it has some restrictions, which may not suit all, I do not expect this to be available to new investors for very long.”
Hagger thinks that those wanting to open an account should be looking at short-term fixed rates. He says: “They have come down from their highs, but many people are still saying that the Bank base rate won’t go up this year, so they still look a good bet. Also, if the Bank base rate does go up, it is highly likely that banks and building societies won’t pass on the full rise as they are operating on such tight margins.”
The best one-year fixed rate Isa is from the Bank of Cyprus at 3.33%, while Abbey, Saga and Nationwide are offering 3.5% for two years. Fixed rates are slightly better outside an Isa, with First Save paying 3.65% for a year.
But if you haven’t used up your Isa allowance, you still end up with more, as the returns are tax free.
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