07:45 14 July 2013
Banks are doing the contrary "race to the bottom" as interest rates continue to take the beating.
You may know it has taken a turn for the worse as Nationwide who has been a consistent leader in giving competitive depositor rates, is implementing rate cuts through its subsidiaries Cheshire and Dunfermline, affecting even their own accounts.
This initiative was reportedly done to put the group on par and in sync with competitors’ declining rates.
Holders of the widely held Nationwide ISA Saver Cheshire and Mysave online Plus perhaps have no reason to rejoice, as it is believed their savings and fixed rate bonds will also suffer the inevitable cuts in returns.
Contemplating on a Nationwide account could be anybody’s initiation to the world of finances. Though it may seem too simplistic, one should not overlook the importance of comparing the rates and other deals offered by each bank and savings type before entrusting them with your hard-earned money.
There are banks offering as much as 6per cent on a regular savings account, however this type is only open to their current account clients. There might also be restrictions on withdrawal as you have to deposit a required amount for 12 months without withdrawal.
There are instant access accounts that require no stringent limits on withdrawals and locked in periods. For those who do not want to dip into their savings, the fixed bond account could be their best bet.
Of course, we should not waste the opportunity to take advantage of your cash ISA allowance. Earnings are tax-free too. Be advised that there are some restrictions on withdrawal during the fixed rate period so that you will not be penalised.
Also available are children's saving accounts that offer some good deals and they are tax-free as well. Some banks are paying as high as 6per cent interest provided a deposit of least £10 a month for 12 months is consistently made, without withdrawals.
Note that children’s Savings Accounts are offered to children up 15 years old. Some banks are also offering Junior ISA at 6per cent interest if bundled with an adult ISA. Otherwise, it earns only 3per cent.
Remember, savings rate deals can only be good if they are offered and backed by a strong and reputable bank.
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