Britain’s safest savings
When banks such as HBoS hit difficulties and rumours persist about the future of Bradford & Bingley, even cash accounts in supposedly solid banks and building societies cause sleepless nights.
So where can investors be certain their money is safe?
NATIONAL SAVINGS AND INVESTMENTS
For ultimate security, Governmentbacked National Savings is the first port of call. NS& I offers a range of products available over the phone, in post offices and online at nsandi.com.
NS&I was a big winner in the aftermath of the Northern Rock debacle when tens of thousands of savers made the flight to the ultimate safe haven.
Premium Bonds are probably the best-known NS& I product. Investors can buy from £100 to £30,000 worth of bonds that offer the chance to win prizes from £50 to £1 million each month - tax-free.
Apart from Premium Bonds, NS& I’s tax-free Direct Isa, which can be operated over the phone and online, is paying 5.3%.
The savings institution also provides an instant-access savings account, fixed-income bonds and pensioner bonds.
Generally, NS& I’s interest rates are not the most competitive, so what savers gain in security they lose out on with returns.
An exception is index-linked savings certificates, which allow up to £15,000 per issue to be invested taxfree.
They pay the rate of inflation, currently 4.8%, plus one per cent. Both three and five-year certificates are available.
Assistant prison governor Nick Walmsley, 53, is a fan. As a higherrate taxpayer, Nick, who lives in Canning Town, east London, earns an equivalent annual return of 9.6% on his cash.
‘The safety of my cash and keeping pace with inflation are two priorities so NS& I was the obvious choice, says Nick.
‘Given what has happened in the banking sector, you can’t be sure your money is entirely safe, even in a cash account.’
NORTHERN ROCK
Following the near-collapse of the former building society in August 2007, Northern Rock bank was taken into State ownership in February this year after failing to find a buyer.
The Government has guaranteed the safety of all savers’ deposits - even those above the £35,000 limit of the Financial Services Compensation Scheme.
As part of the nationalisation agreement, Northern Rock is not allowed to offer market-leading rates on savings, but nervous savers looking for security can still get an attractive 5.75% gross with the bank’s e-Saver online account.
Its fixed-rate bonds pay up to six% over five years. Its cash Isa range offers fixed rates at six per cent, instant access at 4.29% or a 30-day notice Isa at 5.15%.