Nationwide launches new savings account
Nationwide has launched a new savings account with the rate based on the top five deals offered by its main competitors.
Its new Champion Saver account, is a 60-day notice branch-based account offering savers an interest rate of 2.8% AER. The rate is based on the average of the top five branch-based instant access, limited access and notice accounts from eight high street lenders.
They include Abbey, Barclays, Halifax, HSBC, Lloyds TSB, Northern Rock, NatWest and Royal Bank of Scotland.
The rate will be updated on a monthly basis using independent comparison website Moneyfacts.co.uk to compare the eight competitors’ top paying rates.
Andy Hutchinson, head of savings at Nationwide, is confident that the Champion Saver account will appeal to savers who want a competitive rate without having to constantly check the best-buy tables.
He says: "As the interest rate is determined by the average of the top five from our basket of eight high street providers, customers can rest assured that they will receive great long term value without the need for checking interest rates themselves."
However, finance experts have voiced concern over the fact that only eight providers are included in the comparison, meaning a lot of other smaller competitors and building societies, which are at the top of the tables, are not taken into account when setting the rate.
Andrew Hagger, spokesman for Moneynet, warns: "So even though the Champion Saver will ensure you get a better deal than many of the mundane savings offerings on the high street, it’s not a champion in the true sense of the word as there are better and in some cases more flexible options available."
However, he adds: "If you’re a saver that doesn’t have the time to keep an eye on rates this account will no doubt appeal, but for those who are happy to put a little effort in they will be rewarded with even better returns."
To qualify for the account, savers require a minimum deposit of £1,000 and give 60 days' notice for withdrawals. The rate also includes a 1.10% bonus until January 2011.
If you’re happy to shop around for a savings account there are still better deals to be found.
A savings account on which the account holder is required to give a period of notice before making a withdrawal or face a penalty, usually a loss of a specific number of days’ interest or pay a fee. Notice periods of 30, 60 or 90 days are common. These accounts usually pay higher than average interest rates and require large initial deposits (£1,000 minimum) so the notice period and penalties are there to discourage withdrawals. Some of these accounts will only allow a certain number of withdrawals a year.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
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.