Northern Rock customers head for other banks

| September 27, 2007 | 0 Comments

Despite assurance from the Bank of England that money held in Northern Rock deposits is safe, it is anticipated that there is £57 billion available as savers look to other banks to put their money in, according to Abbey.

Consequently, the UK’s biggest high street banks are the winners following the Northern Rock crisis. The UK’s third-biggest bank, Barclays, has received millions of pounds in deposits since savers withdrew around £2 billion from Northern Rock. Abbey and Lloyds TSB have also seen an increase in savings accounts opened by disgruntled former customers of Northern Rock.

Furthermore, the UK’s biggest building society, Nationwide, has received sums approaching seven figures in deposits from new customers. The Government-backed savings institution National Savings and Investments (NS&I), has also noted a significant increase in the amount of savings accounts opened with some individual deposits of up to £1 million.

However, AWD Chase de Vere, the independent financial adviser, said that high street banks are not necessarily offering the best value. It is understandable that savers might want peace of mind, but they are sacrificing good returns. The less mainstream banks tend to offer the best deals with up to 6.91% at Birmingham Midshires.

AWD Chase de Vere added that Barclays best savings account pays an interest rate of 5.39% on an account with limitations whereas Abbey offers a maximum of 6.7% on an eBond. High rates are disappearing following the recent decline in the Libor (the inter-bank lending rate.) Good rates are available but they won’t be around forever so now is the time to start shopping around.

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