Posted: Sat Jan 06, 2007 12:53 pm
Sales fever has hit the high street over the last week but as well as bargains on clothes and electronics, the new year can also be a good time to grab decent deals on your finances.
A number of banks and building societies have launched new rates on savings accounts, credit cards and mortgages. But these rarely come free of pitfalls, so it is worth paying attention to the small print.
Barclays tops the polls for one of the best interest rates on a savings account with its new regular saver paying out 12.5 per cent gross. The rate has been increased by 25 per cent from the start of this month until the end of February. It is fixed for 12 months and applies exclusively to regular deposits of between £25 and £250 per month.
If you pay in the maximum monthly contribution of £250, you would receive £203.94 gross at the end of the year term, or £163.15 if you are a basic rate taxpayer and £122.36 for higher rate taxpayers. If you paid in £150 monthly, you would receive around £122 in gross interest.
To qualify for this account, you must already have a Barclays current account that you pay at least £1,000 into each month. Another downside is that you cannot make any withdrawals during the year. If you withdraw money or miss a payment you will lose the 12.5 per cent rate for the entire year, and instead receive the less attractive Barclays Easy Saver account rate of just 3.46 per cent.
Stuart Glendinning, managing director at Moneysupermarket.com, says that despite the restrictions this is a “hell of a rate”.
But he adds: “It is probably the case that many Barclays current account customers could benefit more in financial terms by shopping around for a better current account and taking another lower- paying regular saver account.”
Barclays’ current account pays just 0.1 per cent gross interest, while Halifax and Nationwide pay 5 per cent and 4.25 per cent respectively.
A number of providers offer regular saving accounts that do not require you to hold a current account with them but these typically pay less interest.
Halifax and Abbey offer accounts that pay 7 per cent gross for one year on regular monthly payments up to £250 as long as you do not make withdrawals.
Smaller building societies including Ipswich, Yorkshire, Principality and Scarborough also offer regular savings accounts to customers without the provider’s own current account, with interest rates typically of 6.25-7.25 per cent.
You could therefore open a number of these accounts with different providers and put away up to £1,500 per month at these higher rates of interest.
Lloyds TSB offers 8 per cent on a regular saver account for two years. This allows you to withdraw money at any time and does not impose a penalty for missed contributions but it does require a Lloyds current account.
Norwich and Peterborough has introduced a fourth interest rate tier to its gold current account. Customers who pay £1,500 or more into their account each month and view their statements online will receive 4.5 per cent gross interest on balances up to £5,000.
In the mortgage market, a couple of lenders have launched headline-grabbing fixed rates to attract the new year bargain hunters.
Lloyds TSB and Cheltenham and Gloucester have launched mortgages with fixed rates of 1.99 per cent for the first year followed by four years at 5.99 per cent.
Melanie Bien, associate director at Savills Private Finance, says: “This is bound to appeal to first-time buyers for whom money is particularly tight in the early years of a mortgage.”
But she says it is important to work out the overall cost of the deal: “The rate is equivalent to 5.19 per cent over five years, which isn’t that attractive when you consider that the Woolwich has a five-year fix at 4.98 per cent.”
This deal also has a high application fees of £999. HSBC, however, is offering 5.17 per cent on its five-year fixed rate deals with no fee.
Leeds Building Society is promoting a £1,000 discount on its three-year fixed rate mortgage. Bien says: “At first glance this sounds like a reasonable saving but the small print reveals that it applies to just one mortgage – its 5.29 per cent three-year fix – so is very restrictive.”
The deal consists of a free valuation, a reduced completion fee of £335 rather than £795 and £250 in cashback or legal services. The interest rate of 5.29 per cent can be beaten elsewhere.
Woolwich has cut the rate on its five-year fixed rate mortgage to 4.98 per cent, 0.31 percentage points below its previous best five-year fix. This also has a high application fee of £1,495.
Not all lenders have started 2007 with good cheer. Moneyfacts.co.uk, the comparison website, says some lenders, including Britannia, Chelsea and Cumberland, have recently increased their fixed rates by as much as 0.3 per cent.
Better news comes for credit card borrowers who might be feeling the pinch of Christmas shopping. Lisa Taylor at Moneyfacts says: “The war of 0 per cent deals has started as lenders fight for the post-Christmas spend.”
HSBC and Virgin top the tables with 0 per cent deals for more than 12 months. GE Money, Abbey and Cheshire have interest-free deals for a year. However, most, if not all, impose transfer fees, which are typically 2 or 2.5 per cent of the balance.
Source: Sharlene Goff, FT.com
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
A number of banks and building societies have launched new rates on savings accounts, credit cards and mortgages. But these rarely come free of pitfalls, so it is worth paying attention to the small print.
Barclays tops the polls for one of the best interest rates on a savings account with its new regular saver paying out 12.5 per cent gross. The rate has been increased by 25 per cent from the start of this month until the end of February. It is fixed for 12 months and applies exclusively to regular deposits of between £25 and £250 per month.
If you pay in the maximum monthly contribution of £250, you would receive £203.94 gross at the end of the year term, or £163.15 if you are a basic rate taxpayer and £122.36 for higher rate taxpayers. If you paid in £150 monthly, you would receive around £122 in gross interest.
To qualify for this account, you must already have a Barclays current account that you pay at least £1,000 into each month. Another downside is that you cannot make any withdrawals during the year. If you withdraw money or miss a payment you will lose the 12.5 per cent rate for the entire year, and instead receive the less attractive Barclays Easy Saver account rate of just 3.46 per cent.
Stuart Glendinning, managing director at Moneysupermarket.com, says that despite the restrictions this is a “hell of a rate”.
But he adds: “It is probably the case that many Barclays current account customers could benefit more in financial terms by shopping around for a better current account and taking another lower- paying regular saver account.”
Barclays’ current account pays just 0.1 per cent gross interest, while Halifax and Nationwide pay 5 per cent and 4.25 per cent respectively.
A number of providers offer regular saving accounts that do not require you to hold a current account with them but these typically pay less interest.
Halifax and Abbey offer accounts that pay 7 per cent gross for one year on regular monthly payments up to £250 as long as you do not make withdrawals.
Smaller building societies including Ipswich, Yorkshire, Principality and Scarborough also offer regular savings accounts to customers without the provider’s own current account, with interest rates typically of 6.25-7.25 per cent.
You could therefore open a number of these accounts with different providers and put away up to £1,500 per month at these higher rates of interest.
Lloyds TSB offers 8 per cent on a regular saver account for two years. This allows you to withdraw money at any time and does not impose a penalty for missed contributions but it does require a Lloyds current account.
Norwich and Peterborough has introduced a fourth interest rate tier to its gold current account. Customers who pay £1,500 or more into their account each month and view their statements online will receive 4.5 per cent gross interest on balances up to £5,000.
In the mortgage market, a couple of lenders have launched headline-grabbing fixed rates to attract the new year bargain hunters.
Lloyds TSB and Cheltenham and Gloucester have launched mortgages with fixed rates of 1.99 per cent for the first year followed by four years at 5.99 per cent.
Melanie Bien, associate director at Savills Private Finance, says: “This is bound to appeal to first-time buyers for whom money is particularly tight in the early years of a mortgage.”
But she says it is important to work out the overall cost of the deal: “The rate is equivalent to 5.19 per cent over five years, which isn’t that attractive when you consider that the Woolwich has a five-year fix at 4.98 per cent.”
This deal also has a high application fees of £999. HSBC, however, is offering 5.17 per cent on its five-year fixed rate deals with no fee.
Leeds Building Society is promoting a £1,000 discount on its three-year fixed rate mortgage. Bien says: “At first glance this sounds like a reasonable saving but the small print reveals that it applies to just one mortgage – its 5.29 per cent three-year fix – so is very restrictive.”
The deal consists of a free valuation, a reduced completion fee of £335 rather than £795 and £250 in cashback or legal services. The interest rate of 5.29 per cent can be beaten elsewhere.
Woolwich has cut the rate on its five-year fixed rate mortgage to 4.98 per cent, 0.31 percentage points below its previous best five-year fix. This also has a high application fee of £1,495.
Not all lenders have started 2007 with good cheer. Moneyfacts.co.uk, the comparison website, says some lenders, including Britannia, Chelsea and Cumberland, have recently increased their fixed rates by as much as 0.3 per cent.
Better news comes for credit card borrowers who might be feeling the pinch of Christmas shopping. Lisa Taylor at Moneyfacts says: “The war of 0 per cent deals has started as lenders fight for the post-Christmas spend.”
HSBC and Virgin top the tables with 0 per cent deals for more than 12 months. GE Money, Abbey and Cheshire have interest-free deals for a year. However, most, if not all, impose transfer fees, which are typically 2 or 2.5 per cent of the balance.
Source: Sharlene Goff, FT.com
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5