Rivals respond to Halifax's 6% savings offer

William Kay
Saturday 21 February 2004 01:00 GMT
Comments

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

HBOS, the banking group which owns Halifax and Bank of Scotland, this week stole a march on rivals with a savings account paying 6 per cent before tax after a year.

Philippa Gee, investment director at the adviser Torquil Clark, said: "I applaud them for bringing fresh thinking into the market and positioning themselves so they are financially stable enough to offer such an interest rate while also challenging people to really make the most of an opportunity."

The account, called Halifax Regular Saver, requires users to deposit between £25 and £250 each month by standing order for 12 consecutive months, making a maximum of £3,000. They are guaranteed 6 per cent gross interest, fixed for 12 months. That is worth 4.8 per cent after tax to a basic-rate taxpayer. At maturity, the capital and interest is swept into an instant-access account chosen by the customert, such as Halifax Web Saver, Halifax Premium Savings Direct or Halifax Instant Saver account. If the account is closed early, the interest will be at the Web Saver rate, now 4.30 per cent.

The account is open to new and existing customers aged over 16, but limited to one account per customer a year, to enforce the £250-a-month ceiling.

David Holmes, spokesman for the Bradford-based Yorkshire Building Society, said: "This is a savings war. We reckon they are losing 1.5 per cent on that 6 per cent; it's like running a six-week television ad campaign."

Nick Robinson, head of savings at Halifax, said: "In the short term this is an investment, and every new product has a cost of recruiting customers. But there will be an incentive for people to start saving again."

Yorkshire promptly extended its offset mortgage with a range of fixed-rate offsets moving on to a tracker charging base rate plus 0.75 per cent. This gives a pay rate on offset savings of 5.59 per cent for the five-year fix, equal to 9.32 per cent for higher-rate taxpayers.

Lindsay Sinclair, chief executive of ING Direct, said: "Again consumers will be lured in with short-term headline rates. They should investigate what happens after six months or a year, when they will be transferred to an account paying greatly inferior interest."

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in