Top rate savings deals disappear to be replaced with inferior products, personal finance provider warns

News - Savings

Monday, 14 December 2009 11:45

Savers after top bank rates are likely to be disappointed going into 2010 as the year ends with some of the best products being withdrawn or having rates reduced.

Experts point out that despite the Bank of England rates remaining unchanged today (thurs December 10) and for the last nine months, the tide has turned in the last few weeks for savers and top deals are disappearing, particularly fixed rate products and variable rate deals.
According to the latest information from Moneyfacts.co.uk, the on-line personal finance information provider, some 62% of product changes since the beginning of November have been product withdrawals. While many of these products have been replaced in the majority of cases the replacements are offering lower returns.

Those that have gone in recent weeks include the West Bromwich Building Society’s Branch Bonus 2 paying 3.35%, Manchester Building Society’s Premier Notice 5 paying 3.31%, Chelsea Building Society’s Rainy Day Savings Issue 4 paying 3.25%, Citibank’s Flexible Saver Issue 6 paying 3.25%, ING Direct UK’s Savings Account (new customers) paying 3.16% and Leeds Building Society’s Online Access paying 3.05%.

‘Legislation requiring providers to hold increased savings deposits and nervousness over the money markets had led to increasing competition amongst providers to attract savers’ money and savers have seen rates steadily increasing, particularly on fixed rate bonds. However, in the last few weeks the tide has turned and many top deals are being withdrawn,’ said Michelle Slade, spokesperson for Moneyfacts.co.uk.

‘Providers appear to be returning to more traditional ways of raising funding and reducing reliance on savers’ money. This decreasing availability of top rates means that when a market leading deal is launched it is soon over-subscribed,’ she added.

An example is the recent launch of the top paying one year bond from Melton Mowbray Building Society that lasted just one day.
‘Savers need to keep a close eye on the savings market and act quickly when top deals are launched otherwise they are likely to miss out,’ added Slade.