Beware of 'bonus rates on saving accounts'

Those Britons on the search for a new savings account are being advised to do so with care, it has been revealed.

Careful consideration should be taken when selecting a savings account, it has been suggested.

With the base rate of interest standing at an all-time low, Jane Baker writes in a lovemoney.com piece that for those people who believe rates are set to go up soon, taking out a variable savings product could be advisable.

Indeed, those looking to compare savings accounts may be interested her claims that the rate of interest attached to such products are on the up, with some of the most competitive easy access accounts offering rates of three per cent or more.

Among the kinds of products currently offering the highest savings, she reveals, are the latest issue of the Alliance & Leicester Online Saver - which offers 3.15 per cent interest - and the Egg Savings Account that a 2.8 per cent rate attached to it.

Such rates are a "big jump" from the typical savings rate of 1.48 per cent seen earlier this year.

However, the above - and many other - products have a bonus variable rate of interested attached to them. Ms Baker points out this could change at any time and savers would have "no way of knowing what the rate will be next month".

She goes on claim that although fixed bonuses can offer some sense of security, after their expiry savers could find they are left with a "paltry rate". However, banks will be counting on consumer apathy to remain with such a product.

Overall, she states that while there is nothing wrong with selecting a high interest savings account which includes a bonus offer, at some point next year consumers will have to switch savings products to get a good deal once more.

As such, choosing a product with "a top rate, but no bonus instead" was advised, as she voices her preference for the ING Direct Savings Account, which offers a fixed saving rate of three per cent for a 12-month period.

Taking the time to get a high interest savings account could be especially advisable as research from National Savings and Investments showed people set aside an average of £92.41 each month, the highest amount recorded for more than four years.