Supermarket savings accounts give banks a run for their money
27 August 2009 / by Andy Davies
Competitive savings rates from supermarkets are giving banks a run for their money as both Tesco and Sainsbury’s have increased their savings account interest rates, Moneyfacts.co.uk has revealed.
The personal finance information provider has found that Tesco and Sainsbury’s are keeping up with other high street savings accounts. The Tesco savings account is one of the best performing with an interest rate of three per cent on its Internet Saver Account, while Sainsbury’s is offering 2.90 per cent interest on its internet savings account.
Although, according to Moneyfacts.co.uk, an Egg Savings Account is still the best internet savings account on the market, offering customers a rate of 3.25.
Commenting on the increased rates, Michelle Slade, spokesperson at Moneyfacts.co.uk said: “Many consumers are disillusioned with traditional banks and instead are looking for an alternative provider for their finances. The combination of competitive deals and a strong brand that consumers already know and trust is a real winner for the supermarkets.”
“Smaller providers are relying more heavily on their savings books to fund their lending activities and in turn are offering the most attractive savings rates.
“By comparison, many high street banks have a number of alternative ways of raising funding and tend to offer less attractive deals.”
Ms Slade added that the competition posed by Tesco to high street banks is only going to increase: “Tesco has already announced its intention to open branches and to move into offering mortgages and possibly current accounts. It will be looking to make its mark in these new areas and is likely to enter the market with highly competitive deals.”
© Fair Investment Company Ltd
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* Income payments and returns are dependent upon the FTSE 100 Index.
| Provider | Account | Interest Rate (AER) | Term | Apply |
|---|---|---|---|---|
 The Access Bank UK » |
3 Year Fixed Rate |
2.20% per annum |
£5,000 | Apply Now > |
| Earn 2.20% fixed interest – 3 year term – Minimum deposit £5,000 – No withdrawals permitted. FSCS Protected | ||||
The Access Bank UK » |
2 Year Fixed Rate |
2.02% per annum |
£5,000 | Apply Now > |
| Earn 2.02% fixed interest – 2 year term – Minimum deposit £5,000 – No withdrawals permitted. FSCS Protected | ||||
 Vanquis Bank » |
4 Year Fixed Rate Bond |
2.40% per annum |
£1,000 | Apply Now > |
| Earn 2.40% gross/AER fixed for 4 years. Save £1,000 – £250,000. No withdrawals during the term. Individual or joint accounts available. Annual or monthly interest. FSCS Protected | ||||
The Access Bank UK » |
1 Year Fixed Rate |
1.72% per annum |
£5,000 | Apply Now > |
| Earn 1.72% fixed interest. 1 year term, save from £5,000 to £500,000, no additional deposits or withdrawals permitted, FSCS Protected | ||||
Vanquis Bank » |
3 Year Fixed Rate Bond |
1.85% per annum |
£1,000 | Apply Now > |
| Earn 1.95% gross/AER fixed for 3 years. Save £1,000 – £250,000. No withdrawals during the term. Individual or joint accounts available. FSCS Protected | ||||
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| Provider | Account | Interest Rate | Term | Apply |
|---|---|---|---|---|
 |
Up to 6 years |
|||
| Capital protected deposit plan with the potential to mature after years 3, 4, 5 and 6. If the plan matures early it will return 5% times the number of years the plan has been in force. Also available for Cash ISA and ISA transfer. | ||||
* Income payments and returns are dependent upon the FTSE 100 Index.
| Provider | Account | Interest Rate (AER) | Term | Apply |
|---|---|---|---|---|
 RCI Bank » |
Freedom Savings Account | 1.30% | Instant Access | More Info > |
| MARKET LEADING. Earn 1.30% gross/AER. Instant Access. No notice periods. Unlimited payments and withdrawals. Pay in from £100. RCI Bank are protected up to a total of €100,000 by the FGDR, the French deposit protection scheme. Manage account online. | ||||
 Ford Money » |
Flexible Saver |
1.22% |
Instant Access | More Info > |
| Earn 1.22% AER variable interest. Interest can be paid monthly or annually. Open an account singly or jointly. Minimum deposit £1. Unlimited deposits and withdrawals permitted. FSCS Protected | ||||
 AA Savings » |
Easy Saver | 1.15% | Easy Access | More Info > |
| 1.15% gross/AER. Instant Access. Free withdrawals and no notice period. Deposit from £100. Includes a fixed bonus of 0.95% gross fixed for the first 12 months. Quick and easy online application | ||||
 Aldermore Bank » |
Easy Access Account | 1.00% | Easy Access | More Info > |
| 1.00% gross/AER on balances from £1,000 to £1 million. Unlimited withdrawals without restriction or loss of interest. | ||||
Gross is the interest you will receive before tax is deducted.
AER stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year.
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