The battle for savings deposits have heated up as Spanish bank Santander have just launched a new 3.1% savings product which falls into fourth place in This is Money’s best buy tables.
No penalty for customers
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Many banks are trying to trying to target in on savers in the fight to add to their financial pools, with money markets which are their other source of funding proving to be volatile playing fields together with massive movements in stock markets.
It has also found its way to second place in the table for true instant access accounts, these accounts allow unlimited withdrawals without penalty to the customer.
At the moment the savings battle is being contested on the variable easy access market and it was last week that Coventry Building Society’s 3.15% Poppy Online Saver was kept company with Newcastle Building Society’s at the top of the table.
However, these products put restrictions on their customers. Both limit savers to four withdrawals a year, but if a fifth withdrawal is made then the rate falls quite dramatically.
This is Money exposed this tactic which is used by quite a few banks at the start of August, and it is a tactic which punishes savers for withdrawing money from so-called ‘easy access’ accounts.
Secure balance sheets
The reason that banks are punishing their customers is because they really want to secure their balance sheets, and if that is the goal they do not want savers withdrawing cash in a random fashion on a regular basis.
Reports have been released which have revealed that banks are trying to seduce British savers in an attempt to increase deposits. With financial markets in disarray, Moneyfacts have said that the pressure is on banks to secure their balance sheets and as such there has been a big campaign to attract domestic savers using heavier marketing and aggressive promotion.