Halifax launches regular savings account paying 10%
Halifax has launched a limited edition regular savings account that pays up to 10% AER, as the savings market continues to hot up.
The account is fixed for one year, meaning savers will not be able to access their money for that period of time. In return, however, they will enjoy an interest of 10% - according to figures from Moneyfacts, the next highest rate is from Barclays, which pays 7.75% - as long as they make monthly deposits of between £25 and £500.
There is a catch or two; the account is only available until Sunday 20 July, and if you do need to make a withdrawal within the 12 months fixed period, the rate of interest will revert to the Halifax web saver account, currently 6.05% AER.
On the plus side, this account is not linked to a current account and is available to new, as well as existing, customers. However, you will need to open a nominated Halifax savings account where your money will be deposited after the 12-months. If you deposit and maintain a further £5,000 in this nominated account, then the interest rate will increase from 10% to 12%.
These nominated accounts include the Halifax web saver, guaranteed saver and Bank of Scotland’s instant access account, which all pay no less that 5% interest. This additional benefit suggests that Halifax is after serious savers rather than just a few headlines generated from its double-digit interest rate.
The new account comes as saving rates reach new heights - one of the few silver linings of the credit crunch. Abbey, Bradford & Bingley, First Save, Icesave and Kaupthing Edge are all currently offering saving accounts with interest rates of over 7%.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.