ING launches 5% AER online deal
ING Direct has launched an online account paying 5% AER on deposits from £1.
Despite Bank of England interest rate chops playing havoc with the savings market, with providers reducing AERs and pulling popular deals at a moment’s notice, the Dutch-owned bank has launched a deal that still offers savers a modest return on their nest eggs.
The account includes a bonus of 2.75% AER for 12 months and allows unlimited withdrawals without penalty.
There are several things to consider though; first the bonus rate is only for 12 months, so after this time it will probably be well worth moving your money elsewhere.
In addition, the interest on this account is variable and could fall if the Bank of England continues to decrease base rate.
If you are concerned about your interest rate decreasing, then you might be better off opting for a fixed-rate deal. ICICI Bank pays 5.10% AER on its 12-month HiSAVE fixed rate. You’ll need to have £1,000 to deposit though, and this deal does not allow early access.
Elsewhere, Anglo Irish Bank pays 5% AER on its fixed-rate bond on deposit from £500. Bear in mind, though, that additional deposits are not allowed so this account is only suitable for people looking to put away a lump sum.
If you want easy access to your money, then the bad news is that the top deals are currently all variable rates.
ING Direct comes out well rate-wise, but you could also consider Anglo Irish Bank’s easy access account. This pays 4.55% AER on deposits from just £1 and there are no penalties if you make a withdrawal.
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.
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.