The 12 Month Bonus Rates Dance

Written by Karen Bryan

£1 coin symbol2With so many of the UK’s top-paying instant savings accounts having a 12 month bonus rate, you end up having an annual merry dance; you have to keep moving your cash around, to make sure you get a highest possible rate of interest on your savings.  I’m always on the lookout for instant savings accounts paying decent rates. My strategy of opening accounts in advance of requiring them, so I have a ready home when the dance is about to commence, has proved successful over the years. If possible, I’ll open instant access saving accounts which have a low minimum balance and some kind of rate guarantee, e.g. part of the interest rate is fixed.

When I opened a Halifax Reward Saver in August 2012, the interest rate of 2.5% wasn’t looking that tasty. However, when my husband’s Santander eSaver‘s (Issue 5) twelve month bonus expired in mid June 2013, we were able to move the money into my Halifax Reward Saver account. At that time, the highest rate of interest being paid on an instant access account was around 1.75%.

Unfortunately, the 12 month bonus on the Reward Saver expires at the end of August 2013. As usual, I’m on the lookout for any other alluring instant access accounts.

If nothing better becomes available, the cash currently in the Halifax Reward Saver may have to be transferred into the Halifax Everyday Saver,  opened in April 2013, which is paying a paltry 1.5% (1% fixed rate 12 month bonus plus 0.5% variable).

Things are getting worse. The rate of interest on new Halifax Everyday Saver accounts is now 1% (o.5% fixed rate 12 month bonus plus 0.5% variable). Bad news, with the June 2013 UK Consumer Price Index registering a 2.7% rate of inflation and 20% tax to pay on the interest earned.


One Response to “The 12 Month Bonus Rates Dance”

  1. Hi Karen. Great post! It’s reminded me: we did a little video on this last year (painfully cringeworthy, as you might imagine:

    I think ‘bonus rates’ has dropped off the radar somewhat, because it’s less of an issue for those looking right now. It’s still an issue, as you say, for those currently in possession of bonus-laden accounts.

    I know it’s quite a radical move, but there must be a case for interest-paying current accounts now. If you’ve got smaller volumes, Nationwide is paying a bucketload, and if you’ve got larger amounts, Santander will offer 3% – more than most accounts and bonds offer right now. As far as I’m aware, only First Direct’s ISA will get you above inflation, and they’re asking for £40K to get the tax free 3%.