Icesave savings accounts
‘The base rate is five per cent and likely to fall…’ So starts the sales pitch from Landsbanki of Rykjavik for its one-year fixed rate Icesave savings account, fixed at a very interesting 7.01% AER for a year. Whether the base rate will fall from 5% is open to conjecture of course. The Bank of England was split down the middle on base rate during May 2008 and decided to leave interest rates unchanged. And a rise in interest rates is the Bank’s only real tool against rising inflation of course, and as we know inflation is creeping worryingly toward the 4% figure. But … this is a terrific rate of interest, and largely fuelled by the Credit Crunch. Banks are so short of cash that they are having to offer increasingly good rates of interest, well above the Base Rate, to entice us to deposit with them. And Iceland’s banks, heavily leveraged and so with little reserves of their own, are desperate to get more cash in the vaults in order to keep liquid and keep trading.
All of which may start to ring some alarm bells … could you be investing in a bank that’s likely to go bust? Martin Lewis of moneysavingexpert.com has some useful observations On the Icesave account, (don’t worry about the fact the post was on April Fool’s Day!), and suffice to say it’s well worth sticking a few grand away to get this very good rate of interest. If you are committed to regular, keep your paws off, saving, then this is a good place to start. The Icesave account pays 7.01% a year, or 6.79% if you take interest monthly, and Moneyfacts made the account a Best Buy at the end of April.
Check out our previous Financial deals of the week here.
