Everyone else is getting punished as a result of the crunch, now it’s the children’s turn, with interest rates on kiddie saver accounts slashed across the board last week.
Until last week, it was easy to collect 5.25%-5.5% on a children’s savings account with the likes of Nationwide, Halifax or Chelsea. Not any more - all have cut their rates and the Halifax’s Save4it is now the best high street deal going at 5.05%.
All the rest have slunk beneath the 5% barrier, though oddly enough, I have yet to receive a press release from any of these banks telling me about their cuts.
Best child savings accounts
Base rate only part of the story
The banks will argue that with the Bank of England base rate at 4.5%, getting anything higher than that on a high street savings account is a good deal. That’s true historically, but since the banks are still borrowing on the interbank market at over 5.5% because of the credit crunch, it’s only part of the story.
The other part is that it’s always the small-value accounts where banks cut their rates deepest. They’ll still go on paying more for big money.
You can still get 5.9% from Chelsea on a 90-day notice account, or 6.85% from Bradford & Bingley on a 6-month bond.
Best Notice & Fixed accounts
Fixed rates on the way down
No question, as we’ve been saying since the week after the bank rescue package was announced last month, that fixed rates are on the way down.
The 7% offers have almost all gone –ICICI’s Fixed Rate HiSave is one of the last at 7.1%. The best rates on one and two year bonds are now around 6.8%.
It’s the same story with ISAs. If you want to get over 6%, grab a fixed rate offer now, because they’re disappearing fast. Bradford & Bingley’s Fixed Rate ISA at 6.25% is a top deal, but you have to put down a minimum of £3,600 to get it. Birmingham Midshires’ Fixed Rate ISA pays 6.15% on £1.
With economists predicting that base rate will be down to 3% by next summer, locking into one of these fixed rate deals is likely to be a very smart move.
Best Buy ISAs
