10% on savings, is this the full story?

Halifax Bumper Savings Account – Is there a Catch?

Writes Dan Drage dan.drage@consumerchoices.co.uk

Holes are being picked in the new best buy busting Halifax savings account. Is all as it seems?

Monday will witness the launch of the limited period Halifax (www.halifax.co.uk) ‘Regular Saver’ account, offering an unprecedented 10% rate of savings interest. The actual figure could rise to 12% should the account remain untouched for a year, and £5000 be kept in a separate Halifax account.

The account will be made available for a six week period only.

Leading industry experts, having had time to digest the accounts’ terms and conditions, are beginning to re-evaluate this product’s attractiveness.

The primary sticking point is the way deposits are drip fed into the account, limiting interest returns at the conclusion of the 12 month period.

A maximum of £6000 can be drip fed into the account at £500 a month. The total received in gross interest by the account holder is £325. Most account holders will be anticipating a return closer to the £600 mark, as the advertising campaign suggests.

A 10% rate of interest on a £6000 deposit will only be achieved in the final month of the deal.

Should you make a withdrawal from the account or close the account early, the rate of interest drops to 4.36%.

At the end of the Regular Saver’s account 12 month duration, Halifax are yet to reveal exactly how the rate of interest will be re-aligned. According to the accounts’ terms and conditions, money and interest earned will be moved into a separate nominated Halifax account, which has to be one of a list of six that includes Halifax Web Saver with cash card, Guaranteed Saver, Saver Reward and Instant Saver.

Chris Eagle, Commercial Manager at Credit Choices, had the following to say:

‘The Icesave (www.icesave.co.uk) fixed rate savings account pays 7.01% interest, and those wishing to park a large sum of money in a more straightforward high interest savings account should investigate this possibility’

He continues:

‘ Barclays (www.barclays.co.uk) have an existing product similar in design to the new Halifax account called the Nest Egg savings account. Savings deposits are not drip fed into this account, allowing the full balance to attract the high interest rate from day one.’