Sainsbury's savings account rates increase as savings market improves

Sainsbury's has upped its stake in the savings account market after increasing the interest rates paid on the Sainsbury's Easy Saver account.

Sainsbury's finance - which also provides other financial products including sainsburys credit cards, made the changes to its top performing savings account today, pushing rates from 2.5% to 2.7%, which includes a 2.0% gross p.a./AER bonus for the first 12 months and up to 5 withdrawals per year with no loss of interest.

The Sainsbury's savings account" has climbed the tables along with several other similar accounts provided by its competitors, adding to the new trend in paying higher interest on savings" accounts.

Other accounts paying the highest rates include Tesco savings account, offering customers 2.75% gross/AER (variable) on balances up to £100k which includes a 1.50% gross p.a./AER bonus for the first 12 months and no Withdrawal Restrictions.

Then comes the AA savings account, with the its Internet Extra account offering 2.80% gross/AER on balances from as little as £1, while charging no withdrawal Penalties. This Rate includes a 12 month bonus of 2.30% gross p.a.

According to the Bank of England, savers are putting more money away for a rainy day for the first time in 20 years.

A new report shows that families deposited £24 billion into savings accounts last year while only taking out £20 billion in loans. This means that for the first time since savings records began in 1988 savers saved more than they borrowed.

Research carried out the Office for National Statistics also suggested a rise in saving, with the total amount, including investments and pensions, up last year from 2% of household income to 7% as families prepared themselves for harder times.

The chief economic adviser to the Ernst & Young ITEM Club, said: “People are reducing their borrowings. It’s the combined effect of some families not being able to get credit and other families choosing to pay their debts off.”

The report from the Bank of England showed that savers are continuing to benefit from good deals despite the base rate sitting at the lowest ever level of just 0.5% for the 14th consecutive month.

David Hollingworth, of mortgage brokers London & Country, added: “There’s been a complete turnaround in the approach of borrowers. Rather than using mortgages as a cheap way of borrowing – effectively using their home as a piggy bank to fund their luxury purchases – they are now looking to pay down debt more quickly. They are tightening their belts amid concerns about higher interest rates in the future and questions over the employment market.”

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