Money paid into savings accounts reaches record levels

| May 29, 2008 | 0 Comments
”Money

Figures from the British Bankers’ Association (BBA) have revealed that Britons are taking advantage of high savings rate as the amount of money deposited into savings accounts more than doubled last month to reach record levels.

The BBA said £5.8 billion was deposited into personal bank accounts during April, compared to £2.8 billion the previous month and out-performs the previous six-month average of £2.4 billion.

The figure is the highest since BBA’s records began and shows consumers took advantage of high interest rates available on the high street.

Since the start of the credit squeeze last summer, lenders have been hit by higher borrowing costs and consequently, have been tempting customers with savings rates far in excess of the Bank of England base rate, in order to fund their mortgages.

The Bank of England base rate currently stands at 5% but high savings can be achieved by shopping around.

Foreign banks have recently been entering the British market to tempt savers with high interest rates. Icelandic-owned Kaupthing Edge has an instant-access savings account which pays 6.5% while Indian-owned ICICI’s HiSave account pays 6.41%.

However, a recent report by price comparison site, moneysupermarket.com, urged current account savers to check the small print.

For instance, Alliance & Leicester’s Premier Regular Saver offers a huge 12% but only in conjunction with its current account that pays 1.5%. In comparison, the bank’s best current account pays 8.5%.

Kevin Mountford of moneysupermarket.com said with banks and building societies increasingly cross-selling products to boost their margins, there are now even more reasons to check the small print.

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