The secret high interest savings accounts


Updated on 17 June 2011 | 18 Comments

Banks are offering preferred groups of savers secret high interest accounts, while forcing the rest of us to put up with measly regular rates. Find out how to fight back...

Loyalty usually doesn’t pay when it comes to savings accounts. That is unless you find yourself handpicked by your bank as a preferred customer and offered a secret, high interest savings account.

Yes, The Times has found that several banks are now cherry-picking elite groups of savers and fixing them up with special high interest deals. The paper singled out Lloyds as a provider who has recently begun dishing out these secretive deals ahead of the forthcoming interest rate cuts to their Vantage Account.

But these special rates are not advertised to the general public nor offered to a majority of customers. So what can you do if you find yourself stuck with a paltry rate of return on your nest-egg while other ‘preferred savers’ are cashing in on higher rates?

Loyalty pays

Exclusive, loyalty-based deals are nothing new in the world of banking, as we revealed earlier this year in The bank that most rewards loyalty.

Indeed, at the moment Halifax is offering existing customers the chance to earn a preferred rate of interest on their savings. The deal applies to Halifax’s Direct Reward ISA; which pays a 3.20% rate to existing customers (3.00% to new customers) and the Web Saver Reward account; which offers 3.00% to current customers (2.80% to new applicants).

Getting the right savings account isn’t as easy as it seems, but by avoiding these four nasty catches you won’t go far wrong

You will need to hold a Halifax current account and pay at least £1,000 into it every month to be eligible for these rates. But fortunately the bank currently has a very competitive reward account available that offers £5 cashback every month; so long as you meet the funding requirements (also £1,000 per month).

However if you want to gain access to the top-secret preferred accounts, you’ll have to show even more loyalty. Banks will usually offer favourable interest rates to customers they deem to be particularly profitable, especially if it looks as if they might close their account and switch to another provider.

So obviously, one way to ensure you stand the best chance of being singled out as a preferred customer is to save large sums with your bank (easier said than done!) and threaten to leave if they try to tinker with your account. Using the same provider as your parents or other family members could also see you picked for favourable rates as the bank will be aware that if you have a bad experience and leave, your relative may as well.

But if you still can’t manage to get your hands on a preferred rate of interest, don’t panic; there are still a few fairly competitive standard accounts around...

Easy access accounts

If you’ve got a lump of cash you want to invest, but still need to get at it every now and again, then an easy access savings account could be for you. Here are some of the best deals around at the moment...

Account

Interest rate (AER)

Minimum

Need to know

Access

Coventry BS eNotice

3.05%

£1,000

30 days notice on withdrawals, includes 12 months 0.50% bonus

Online

Nationwide MySave Online

3.05%

£1,000

Only one free withdrawal per year, includes 12 month 1.50% bonus

Online

Santander eSaver

3.00%

£1

Includes 12 month 2.50% bonus

Online

ING Direct Savings

3.00%

£1

Fixed for 12 months at 3.00%`

Online, phone

Post Office Online Saver

2.85%

£1

Includes 12 month 1.20% bonus

Online

As you can see the top paying 3.05% accounts aren’t true instant access deals, as the Coventry BS account requires 30 days notice to withdraw funds and the Nationwide saver only allows one free withdrawal each year. Both of these accounts also require you make a minimum deposit of £1,000.

It’s also worth pointing out that most of the accounts in the table above come with a bonus interest rate that will drop away after 12 months, leaving you with a paltry return on your savings. This is why it’s always worth switching accounts every year to ensure you’re consistently getting the highest rate of return on your savings. Alternatively, you could try negotiating with your provider for a preferred interest rate and threaten to leave if they give you the cold shoulder, especially if you’re a loyal and profitable customer.

Fixed rate bonds

If you don’t need to get at your savings for a while, then you’ll be able to earn a higher rate of return by going for a fixed rate bond. Tesco Bank currently has some of the best deals on the market for one, two and three year fixed term accounts, just take a look at these rates...

Term

Interest rate (AER)

Minimum

Tesco 1 Year Fixed

3.40%

£2,000

Tesco 2 Year Fixed

3.85%

£2,000

Tesco 3 Year Fixed

4.00%

£2,000

All of these accounts are manageable either online or over the phone and will pay interest into a separate bank account on a month-by-month or annual basis. The only downside is that you will have to deposit at least £2,000 into the account; but if this isn’t you, there are several other fixed rate bonds currently floating about...

Account

Term

Interest rate (AER)

Minimum

Access

Barnsley Online Bond

1 year

3.30%

£1,000

Online

Santander Fixed Rate Bond

1 year

3.15%

£1

Online, phone, branch

NatWest Fixed Rate Bond

2 years

3.75%

£5,000

Online, phone, branch

Yorkshire Building Society  Online Bond

2 years

3.70%

£1,000

Online

Lloyds TSB eBond

3 years

3.70%

£2,000

Online

Nationwide eBond

3 years

3.65%

£1

Online

BM Savings Fixed Rate Bond

5 years

5.05%

£1

Online

Lloyds TSB eBond

5 years

3.95%

£2,000

Online

Are you a preferred saver?

Have you ever been offered a secret savings account?

Let us know in the comment box below.

More: Compare savings accounts with lovemoney.com | The best place to put your savings | What we can learn from the people of Richmond

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