Senior Savings - Maximise the interest on your savings account

Thursday, 09 November 2006

Earlier this month the Bank of England increased UK interest rates to a five-year high of 5% because of inflation concerns. For seniors on fixed income and savers this spells good news - but you need to shop around.

If you have a standard high street bank savings account it's time to check the interest they pay. More than likely it's very low. The banks get away with this because more often than not we let any surplus money just sit in our accounts, rather than seeking the best interest rate.

Seniors Discounts provides a quick snap shot of "how little" you may be earning from your high street savings account.

At the time of writing based on savings of £1000/ Instant access account/ Interest rate (AER):

Bank of Scotland 3.75%
NatWest 3.70%
Barclays 3.52%
Lloyds TSB 3.25%
HSBC 2.75%
Northern Bank 2%

Plain and simply the banks are ripping us off because of our complacency.

To make sure you're maximising the interest in your account we have listed the accounts that are currently paying the best rates.

Alliance & Leicester Direct Saver is paying 5.5%. The catch is your require over $5000 to set up the account, and if you withdraw any money in a calendar month your forfeit the interest.

The next big paying instant access savings account is from ICICI's HiSAVE with 6.16% on their instant access account, and you only need £1 to open the account. That's nearly 2% better than the best high street bank!

ICICI is the second largest bank in India and entered the UK market in 2003, and has consistently provided high interest rates. Plus, the promise to remain at least 0.25% higher than the bank base rate till 2007.

For seniors 50 plus there are a some additional options available. We came across over 40 specialist savings accounts for the over 50's and 60's. We have listed the top ones below.

Coventry Building Society offers 2 savings accounts for the over 60's.

Option 1 - Sixty Plus Notice

The account pays 6.10%(AER gross p.a. variable), and includes a bonus of 0.60% in the first year, on balances over £10,000. The rate is guaranteed to match the Bank of England base rate till 31.12.2007.

The downside you have to give 60 days notice to withdraw your money penalty free. Notice-free withdrawals will incur a 60 day interest charge.

Option 2 - Sixty Plus Saver

This instant access account pays 6.25%(AER gross p.a. variable) and includes a bonus 0.75% in the first year, with the maximum deposit of £2000 per month. The rate is guaranteed to at least match the Bank of England Base Rate until 30.06.2010.

For savvy senior savers at the end of 12 months and once the bonus interest finishes it may be worthwhile moving to a new savings account with higher interest.

Checking your balance, transferring money and viewing statements is quick, simple and can be done from the comfort of your own home.

On the security front banks have some of the highest levels of security on the internet to ensure you can access your account online safely. If you're still concerned about internet security read our article Seniors being targeted in scams