The savings account arm of one major UK retail supermarket chain has recently increased the rate on one of its savings products, leading to a 2.9 per cent interest rate offering on a product that is not limited by an introductory bonus rate.
The online banking savings product from Sainsbury’s, an easy access saver with no limit on the number of withdrawals a customer is permitted to make without notice, easily outstrips the offerings of several other major personal and business bank account providers in the UK. While there are easy access savers currently available on the market with better rates of return, they are all limited by bonus rates that expire after an initial 12 months, leading customers to have to move their cash or earn as little as an 0.5 per cent return on their investment.
While the Sainsbury’s product has much to recommend it to savings-minded Brits, there are some things that the public needs to be aware of in the event of taking up the easy access saver. The minimum deposit needed to secure your 2.9 per cent return is £1,000, and the maximum amount permitted to be held in the account without losing the same level of interest is £100,000, as dropping either below the former figure or rising above the latter one will result in your rates dropping to 0.5 per cent as well, very much as if a bonus rate dropped off the saver.
However, industry experts say that consumers need to be aware that the nation’s inflation rate, as measured by the Consumer Prices Index, is currently holding at 3.5 per cent, which means that any savings account that offers a rate of return below that 3.5 per cent figure is actually not earning them any money due to the erosive effects of inflation. Taking basic tax into account, savers need to find a taxable saver offering 4.4 per cent interest – nearly an impossibility in the current economic landscape – or invest in a tax-free cash ISA with a minimum 3.5 per cent rate of return if they have not already done so.