Icelandic bank Kaupthing Edge has announced it will leave its savings rate untouched at 6.5% following the Bank of England base rate cut. This is the second time it has decided to keep its top rate on hold despite base rate reductions. Icesave, the UK savings arm of Landsbanki bank, followed in the wake of its Icelandic peer and also announced that it would retain the 6.05% rate on its easy access account. Kaupthing stormed onto the UK savings market this year, but has since endured a tirade of unfavorable press after Morgan Stanley revealed its borrowing costs have increased 400% over the past year and analysts concluded it is 7.5 times more likely to default than any other European bank. However, UK savers can take solace in the fact that their savings are covered up to £35,000, as well as the impressive guarantee on the Kaupthing account of 0.3% above base rate until 2012.
Archive for the ‘Savings’ Category
Kaupthing remains top of savings best-buy
Friday, April 11th, 2008Has the Bank of England lost control?
Thursday, April 10th, 2008Some are questioning whether the financial turmoil has rendered the Bank of England powerless to direct how much the biggest financial names on the High Street charge for credit and pay customers for their deposits. For many, today’s predicted cut in base rate will be meaningless. While banks and building societies have been cutting savings rates, they have also been raising mortgage rates for new borrowers. The only people to benefit would be existing mortgage customers on the track rates which follows the movement of the base rate. The current market turmoil could however be providing banks and building societies with the opportunity to rebuild their profit margins after being hit (at various levels) by the subprime market. Once again, the consumers are paying for the cost of the financial industries’ imprudence.
100% savings account - sounds good?
Sunday, March 16th, 2008The Saving Gateway scheme could hand you £600 for free over two years as long as an equal amount can be put forward over that period. The aim of the scheme is to encourage those on low incomes to save by possibly matching their contributions. It will not be launched until 2010 and the consultation stage will carry on until June this year. The Government suggests encouraging saving by offering either 20p, 50p or £1 for every £1 saved. The two pilot studies in 2002 and 2005 used these varying amounts but the Government has yet to decide on how much it will offer and is open to suggestions from members of the public at Saving Gateway Consultation, Room G67, HM Revenue and Customs, 100 Parliament Street, London SW1A 2BQ or julie.duffy@hmrc.gsi.gov.uk. Evidence from the pilots however, showed that the ‘match rate’ did not need to be as high as £1 per £1 to encourage people to save. Eligibility has been reined back to very low income levels but consideration is still made on an individual basis, so several people in the same household can sign up to the scheme.
Just how safe are overseas banks?
Thursday, February 21st, 2008New banks from foreign shores are tempting savers with top rates of interest on internet accounts. Kaupthing Edge is owned by Icelandic Bank Kaupthing and its UK subsidiary Kaupthing Singer & Friedlander. ICICI Bank UK, a subsidiary of the huge Indian ICICI Bank, operates in 18 countries and has 24m customers worldwide. FBN (UK) Ltd, whose account, under the brand name FirstSave, is also in the best buy tables, is a subsidiary of First Bank of Nigeria. With all three banks the money in your savings account always stays in the UK and is invested mainly in cash and short-term bonds - or near cash - to finance the bank’s UK business. Your money will not end up in Nigeria, India or Iceland. Given the distinctly dodgy reputation of some Nigerian operations - it is the home of internet fraud and corruption is rife - this should provide reassurance to anyone considering FBN’s account. Savings in any of these three banks are covered by the UK’s Financial Services Compensation Scheme (FSCS). If any of these banks go bust then you can claim up to £35,000 per person per bank as they are all fully authorised by the FSA.
Egg slashes savings rate by 0.5%
Wednesday, February 13th, 2008Following last week’s rate cut by the Bank of England, Egg has slashed the rate on its internet savings account by 0.5% - double the cut in the base rate. Until the end of last year Egg’s Internet Account came with a promise that its before-tax rate would at least match base rate – 5.25% from last week. But now that the guarantee has run out, the bank has taken a heavy hand to the account. Its loyal savers now earn 4% after savings tax (5% before tax) down from 4.4% (5.5%). Customers looking for a higher rate may want to switch to newcomer Kaupthing Edge which has said it will not be reducing the 6.50% it pays to online savers, despite the change to the base rate.
Savers should beware as rates fall
Monday, February 11th, 2008Interest rates are coming down on many savings accounts following the Bank of England cut on Thursday. But although the base rate fell by just a quarter of a percentage point, the rates on some savings accounts have come down by far more. Newcomer Kaupthing Edge, however, has thrown down the gauntlet by declaring that it will not cut the 6.5% rate on its table-topping easy-access account. ICICI, which pays 6.41% to HiSave customers, Bradford & Bingley (6.40%) and Icesave (6.40%) have yet to reveal whether they have the stomach for a fight. Watch this space!
Bank cuts interest rates to 5.25%
Saturday, February 9th, 2008The Bank of England cut interest rates on Thursday by a quarter point to 5.25 percent despite calls for a half-point cut. The widely expected quarter point cut by the Central Bank was modest compared to the recent cuts made by the US Federal Reserve (1.25% points last month alone). The Bank’s move will be welcomed by many mortgage borrowers, but homeowners who do not have a mortgage deal directly linked to the base rate may be disappointed as some lenders have been increasing their own rates in anticipation of a cut. The decision by the Bank of England’s Monetary Policy Committee comes as more evidence emerges of a slowdown in economic growth both in the UK and overseas.
Newcomer Kaupthing offers 6.5% to online savers
Tuesday, February 5th, 2008Icelandic-owned Kaupthing Edge, an online savings provider, has become the latest foreign bank to launch an account aimed at British savers. The instant-access savings account which pays 6.5% gross rivals that of ICICI Bank’s HiSave account at 6.41% (which has stayed at the top for a long while). Savers must first open the instant-access account with a minimum of £1,000 before they can take advantage of Kaupthing’s fixed rates while ICICI HiSave only requires £1. It also offers a six-month fixed-rate bond at 6.8% gross and a 12-month fixed-rate bond at 6.86% gross. Kaupthing is regulated by the Financial Services Authority and as such savers’ cash up to £35,000 is protected under the Financial Services Compensation Scheme if the bank were to run into difficulties. Kaupthing also guarantees that the rate on its instant-access account, which is variable, will not be less than 0.3 of a percentage point above the base rate until February 2012.
Many lenders failed to pass on rate cut
Wednesday, January 9th, 2008According to figures, eighteen of the 103 mortgage lenders failed to pass on any of last month’s interest rate cut, while sixteen reduced their rates by less than the full 0.25%. However, many banks and building societies have taken the opportunity of the interest rate cut to reduce their savings by more than the 0.25% reduction in base rates. A total of 117 providers have so far cut their savings rates, with just 15 leaving them unchanged. Alliance & Leicester has made the biggest reductions to its savings by slashing rates by up to 0.5%, while HSBC has reduced some accounts by up to 0.49%. Britain’s biggest mortgage lender Halifax and Bradford & Bingley have both cut rates paid to savers by up to 0.4%, while a number of banks and building societies, including Britannia, Royal Bank of Scotland and NatWest, Yorkshire Bank and Sainsbury’s have decreased them by 0.3%. Will another rate cut mean banks carry on cheating customers even more?
Northern Rock entices savers and puts off borrowers
Friday, December 14th, 2007For the past two weeks, the bank has been offering loyalty bonuses to savers and increased rates to a range of savings accounts. But on the other hand, it has withdrawn mortgages, loans, credit card, and increased borrowing rates to rediculous highs with huge arrangement fees. Obvious signs that its trying to recoupe some of its loses after its savers decided to match away with their money in toe back in October. It has since then borrowed more money from the Bank of England to the tune of £29bn. The move has pushed some of its savings products up the best buy tables and deterred mortgage brokers with fixed rates starting from 6.79% on 90% LTV with arrangement fee of £1,995. As a good loyal Northern Rock mortgage customer, I will have to match off too unless they sort this out.
