Savings offers merit scrutiny

THE level of competitiveness in the savings market we've witnessed throughout this year shows no signs of slowing down. In the past couple of weeks we have seen the launch of some attractive-looking new deals targeted at internet savers as well as the increasingly popular over-50s market.

When you think of an internet savings account, like most online-based products and services, you automatically think of it as something that is easy to access, view and utilise on a frequent basis. While the same is broadly true for internet savings accounts, just because it is available online doesn't mean that it will always offer these features.

As an example, Abbey introduced its new eSaver Direct account from 12 November offering a tempting 6.4 per cent gross from £1. However, on closer inspection, you will see that the interest rate includes a 0.40 per cent bonus that is only available for the first 12 months. More important is that if you make a withdrawal, you receive no interest on your entire balance for the whole month in which you make a withdrawal.

Similarly, Halifax has come to market with their Web Saver Extra account, paying 6.25 per cent gross on balances up to £100,000. While the rate makes it looks worth a second glance, you need to be aware that you can make one free withdrawal each year. Any further withdrawals and you lose 30 days interest.

So, while many previously viewed an internet account as something you can regularly dip in and out of, these latest offerings will only be an attractive proposition if you are a serious saver and looking to leave your money untouched for the medium term. However, for longer-term savers, there are rates of up to 7 per cent gross available with London Scottish Bank on a one-year bond.

Savers aged over 50 have reason to smile with two new product launches targeted at their age group. Stroud and Swindon BS is offering 6.5 per cent gross on its Platinum 50 Saver issue three, but the rate includes a bonus of 0.9 per cent for the first six months, which then reduces to 0.45 per cent for the following six months. The Online Freedom 50 account from Leeds BS pays a competitive 6.45 per cent gross, but again note that the rate includes a bonus element of 0.7 per cent until 30 April 2008, when it is cut to 0.35 per cent .

To keep tabs on the latest savings best buys, take a quick look at www.moneyfacts.co.uk.

? Andrew Hagger is head of news and press at moneyfacts.co.uk, the independent personal finance website