Northern Rock savings reallocated

by Gill Montia

Story link: Northern Rock savings reallocated

The UK’s leading High Street banks are benefiting from Northern Rock’s difficulties as its former customers seek a safe haven for their money.

Barclays has reported an influx of millions of pounds in deposits since savers withdrew up to £2 billion from Northern Rock.

Lloyds TSB and Abbey are also opening new savings accounts daily, for former Northern Rock customers.

In addition, Nationwide has received sums “approaching seven figures” in deposits from new customers over the past fortnight.

Despite the Chancellor of the Exchequer’s guarantee that Northern Rock deposits are safe, consumers appear to be favouring security over interest rates.

National Savings and Investments (NS&I), which is backed by the Government, has recorded a sharp rise in the number of new savings accounts, some with deposits of up to £1 million.

High street banks, building societies and investment management companies are working hard to capitalise on investor insecurity but according to savings experts, the High Street banks rarely offer the best value.

Sue Hannums, of AWD Chase de Vere, the independent financial adviser, recommends a Birmingham Midshires 11-month bond, or an interest rate of 6.9% on a one-year fixed rate from Anglo Irish Bank.

Barclays’ best savings account currently pays an interest rate of 5.39% on an account with restrictions, while Abbey offers a maximum of 6.7% on an eBond.

NS&I offer 6.3% on their most popular cash Isa, but rates on standard easy access accounts are poor.