Daily Express

Fight back now to win the war on sav­ing rates

- By Har­vey Jones

SAVERS reel­ing from NS& I’s de­ci­sion to slash in­ter­est rates and cut pre­mium bond prizes are be­ing urged to make their money work harder by ei­ther shop­ping around for bet­ter deals or fo­cus­ing on pay­ing down their debts.

Get­ting a de­cent re­turn is harder than ever and yes­ter­day’s an­nounce­ment by Na­tional Sav­ings & In­vest­ments piled on fur­ther mis­ery for savers.

The Trea­sury- backed provider, which has 25 mil­lion cus­tomers, cut the rate on its mar­ket- lead­ing easy ac­cess di­rect saver ac­count from 1 per cent to 0.15 per cent.

Its best buy in­come bonds fell from 1.15 to 0.01 per cent, and its in­vest­ment ac­count from 0.80 to 0.01 per cent.

These come into force from Novem­ber 24 and fi­nan­cial ex­perts are urg­ing NS& I savers to con­sider ev­ery method of boost­ing their re­turn.

Anna Bowes, co- founder of Sav­ings Cham­pion, said “the sav­age­ness of these rate cuts is dev­as­tat­ing” and could force down rates else­where: “If a wall of money is pulled out of NS& I it could swamp other sav­ings providers, de­stroy­ing the re­cent pick- up in com­pe­ti­tion.”

In to­day’s sav­ings mar­ket, any bank or build­ing so­ci­ety that of­fers a mar­ket- lead­ing rate is be­sieged by po­ten­tial cus­tomers.

Last week Skip­ton Build­ing So­ci­ety pulled its on­line bonus saver, which paid 1.20 per cent in­clud­ing a 0.5 per cent bonus, af­ter “un­prece­dented de­mand” in the first 24 hours.

NS& I was forced to act af­ter savers paid in £ 14.5 bil­lion in a few months, and Har­g­reaves Lans­down per­sonal fi­nance an­a­lyst Sarah Coles said: “It has to bal­ance the needs of savers against tax­pay­ers, who even­tu­ally pick up the bill.”

For those want­ing easy ac­cess, the Skip­ton eSaver Is­sue 16 cur­rently pays 0.70 per cent on bal­ances up to £ 25,000, ris­ing to 1.01 per cent for sav­ings over £ 50,000. Ford Money’s Flex­i­ble Saver pays 0.75 per cent.

Coven­try Build­ing So­ci­ety’s Dou­ble Ac­cess Saver pays a vari­able 1.20 per cent, with just two charge- free with­drawals a year.

Coles said you get more if you can tie up your money in a fixe­drate bond: “You can earn up to 1.31 per cent over one year with Oa­knorth, and 1.36 per cent over two years with Al­der­more.”

She added: “This way you will also lock in a rate, which can be par­tic­u­larly use­ful when sav­ings rates could fall fur­ther.”

More than 22 mil­lion peo­ple hold pre­mium bonds and although the prize fund rate was also cut the drop was less se­vere, from 1.40 per cent to 1 per cent. From De­cem­ber the odds of each £ 1 bond win­ning a prize will fall from 24,500 to 1 to 34,500 to 1.

Scot­tish Friendly sav­ings spe­cial­ist Kevin Brown said those with debts should di­vert sav­ings into pay­ing them off in­stead.

The dif­fer­ence be­tween the in­ter­est paid on sav­ings and that charged on debts is huge – many credit cards charge around 20 per cent, with over­drafts up to 40 per cent.

Brown said oth­ers may want to con­sider stocks and shares: “They of­fer the po­ten­tial for more at­trac­tive re­turns, but with risk at­tached.”

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