Regular savings accounts carrying a 4 per cent interest rate are on offer from many banking providers this month, industry experts recently reported.
Nationwide subsidiaries Dunfermline, Derbyshire, and Cheshire are all hoping to attract new savers this year with their Platinum Monthly Plus regular savings plans. For the first year, savers will earn 4 per cent after basic tax on their deposits, with personal and business bank account experts estimating that the lucrative rate of return will make these savings products highly popular.
However, these new savings accounts are not without drawbacks, as once the 12 month bonus rate falls off, savers will need to move their cash if they want to avoid an after-tax rate of return of only 0.8 per cent. Savers will also see their interest rates plummet to the low figure if they miss any more than one minimum £100 monthly payment, or make two or more withdrawals from the account.
Other banks and building societies are offering similar deals, such as the 3.4 per cent after basic tax Christmas Regular Saver from West Brom. The account carries a much less restrictive £10 a month minimum deposit, and the rate remains at its high figure until the end of the year.
However, the West Brom saver is also subject to stiff penalties for missing even one payment, as the rate will drop to a truly abysmal after-tax rate of 0.04 per cent. Moreover, you cannot touch your cash until November 2012.
If you’re looking for a more permissive deal, Monmouthshire BS’s new Flexible Saver may be a better fit. In exchange for a 3.2 per cent return after tax, you can make as many as four withdrawals over the course of the year without risking losing out, provided you meet the minimum £20 deposit to open the account and do not exceed monthly deposits of £1,000.