Best bank interest rates

[Saracen]

.....

Stupid bank. They don't even send the customer out info of any changes.

Or not so stupid.

They do it because it works.

Most people don't keep a close eye on savings. They pick what seems to be the "best" account, plonk their money it is and forget about it until they need it. They don't regularly check rates, let alone comparative rates.

Banks compete with each other, and rates is the main tool to do it. They get new customers in, usually away from other banks, by aggressive rate-led marketing, but they have to keep doing it, because the opposition sure are. So they offer attractive recruiting rates, but then .....

They rely on customer apathy and inertia. It's a pain to keep opening new accounts in order to move your money, and most people won't do it. And the banks accept that there are those that do do it, and that they lose those customers, as inevitable collateral damage and of far less importance than attracting new business. They'll cheerfully sacrifice 10 savvy customers to gain 100 naive ones.

A smart saver is aware of all that, and if you want to maximise income, play the game. Keep an eye on rates, and move it about. When you move away from an account, don't close it. Keep a modest amount in it and every once in a while, do a deposit and removal or two. Or, if you have online access, bounce an automated payment around a bit. Banks have a habit of just closing inactive accounts (and sending a cheque for the balance). I've had it happen to me when I took my eye off the ball.

But if you keep the account open and modestly active, it's much simpler to open a new account when a bank you're already known to becomes top of the tree again.

Of course, whether it's worth playing the game entirely depends on how much you have in savings of this type.

[Stringent]

Yup you are correct Saracen. While I don't have mega savings in this account, I am just ore annoyed they keep changing things and names and decrease the interest rate of the original, where as the newer one is more albeit slightly.

Anyways, I'll see how it pans out before I ring them up and ask to change my account type.

[reldavidson]

Saw an ISA with Alliance and Leicester 10% gross p/a - thats the best fixed income product that retail can get these days esp with libor up around 6%.

however, can get better returns with other products - wheat, power & gas plus gold will have larger net returns than 10; but speak to your broker and he should be able to sort you somehting decent out. could also try fool.co.uk

[Funkstar]

Are you sure? it's not on their site.

Abbey are doing a Super ISA with a 10% headline rate if you invest the same or more in their Gauranteed Growth Plan (the latter is not tax free).

A&L are offering a 6.25% ISA, but that includes a 1% bonus for keeping it there until the end of May next year. So really, it's only 5.25%

[kalniel]

Are you sure? it's not on their site.

It's here:
Savings Premier ISA - Alliance & Leicester

But it's only when you open a new account.

Also the bonus for the Issue 4 isa (6.25&#37 isn't anything to do with keeping it there, it just means that the rate has a 1% bonus until the end of may, and after that the rate drops (so transfer out). If you moved it before then you'd still get the 1% bonus.

[TheAnimus]

On the other hand, there is also the potential for losing your shirt. And I'm partial to my shirts.

More likely to happen, enless you've got a lot of dumb luck.

The classic stratergy of buying an Index is very volatile at the moment (ie you wouldn't nesicerryally be able to get money out when you want.)

Shorting your least favourate stock, and longing a corresponding index, a nice simple stratergy which offers some attempt to reduce risk on the idea that if your company does better itself, the index will too.

But at the moment even that simple tactic is rather risky.

[Funkstar]

It's here:
Savings Premier ISA - Alliance & Leicester

But it's only when you open a new account.

Also the bonus for the Issue 4 isa (6.25%) isn't anything to do with keeping it there, it just means that the rate has a 1% bonus until the end of may, and after that the rate drops (so transfer out). If you moved it before then you'd still get the 1% bonus.

OK, I stand corrected

You would think they would be shouting about the 10% more, like by having it on their front page.

[Mike Fishcake]

Cash is cash - you put the money in and have a guaranteed fixed interest on return.

The only danger with cash savings is that the bank goes belly up - but luckily we are now 100% protected up to 35000 so any amount less than that is fine. If you're ultra cautious (ok, I am) then make sure your interest is payed monthly, so that you get the highest possible return at any point if the bank did go belly up.

Ahh of course, I'd forgotten about the £35k thing.

I was going to ask if KE were covered due to being a foreign bank, but Saracen answered that question!

[greenalien]

Just by way of encouragement, if you invest £3600 in an ISA today, and do the same thing every year for the next 10 years, then (assuming 5% interest) you'll have £47,544.43. (but you'll have only paid in £36,000) Keep going for another 10 years and you'll have £124,989.31. (but will have only paid £72,000). After 30 years, you'd have £251,138.84, while after 40 years it would be £456,623.15.

That's why the sooner you start saving, the better! Of course, nobody knows the long term interest rate, but over the last 25 years it has averaged out at around 8%. If you had saved as above for the last 40 years, your savings would now be worth £1,007,211.74!

[Funkstar]

And 40 years ago, you could have bought a house for not much more than £3,600

[JK Ferret]

40 years ago I was -21 years old...

[badass]

Just by way of encouragement, if you invest £3600 in an ISA today, and do the same thing every year for the next 10 years, then (assuming 5% interest) you'll have £47,544.43. (but you'll have only paid in £36,000) Keep going for another 10 years and you'll have £124,989.31. (but will have only paid £72,000). After 30 years, you'd have £251,138.84, while after 40 years it would be £456,623.15.

That's why the sooner you start saving, the better! Of course, nobody knows the long term interest rate, but over the last 25 years it has averaged out at around 8%. If you had saved as above for the last 40 years, your savings would now be worth £1,007,211.74!

You forget inflation. As mentioned above, 40 years ago you could have bought most of a house for that much. Compounding interest long term always makes the end look far better than it actually is. If inflation remains at 4%, your £1000,000,000 has the same buying power as appx £216,000
Thats for £144,000 invested. Over 40 years.
Doesn't sound so good now, does it?