Personal Finance Update

Personal Finance Update - A&L Regular Saver, Mortgages and PPI / Personal_Finance / UK Banking

By: MoneyFacts May 08, 2007

Rachel Thrussell, Head of Savings at Moneyfacts.co.uk – the money search engine, comments:

A&L regular saver makes a comeback

“Alliance & Leicester has relaunched its regular saver, but savers should still be ware of the limitations that such an account offers. Whilst the account offers a market-leading rate of 12%, this is limited to a total investment of £3K over a year, spread across maximum monthly contributions of £250. The account also requires that a Premier Current Account is opened, which pays 1.49% credit interest; that’s 4.45% lower than the award winning Premier Direct Account which Alliance & Leicester offers.

“If the thought of receiving 12% interest on your savings is appealing, the maximum possible return is £195, which is also subject to tax. Compare this with the best buy ISA from Barclays paying 6.31%, which does not have the caveats of requiring linked accounts or restricting the monthly investments, the return is £104.22. If you had the full £3000 to save at the start of the year, investing the full amount would net you a tax-free return of £194.89.

“The A&L account undoubtedly offers a great return, but only for savers prepared to make a commitment to a fixed amount each month, and who don’t require any flexibility. Also they must consider the ‘hassle’ factor of switching current account providers. Is the extra interest worth it?

Savings for the forgotten children

“While the Government has been actively encouraging savings in Child Trust Fund account, those children born before its introduction seem to have been forgotten. The good news it that providers are now realising this gap in the market, and this week we have seen the launch of Chorley & District BS’s Foxley Fund. An account paying 6.35%, using terms similar to that of a Child Trust Fund account. The maximum yearly investment is £1,200 and it matures on the child’s 18 birthday.

“It is great to see that providers are offering the forgotten children the same opportunities as those eligible for the Child Trust Fund scheme. This is a great rate of return but is a long term savings plan so you must consider that these funds will be tied up until your child reaches 18.

Mortgages

Julia Harris, mortgage analyst at Moneyfacts.co.uk – the money search engine, comments:

Source: http://www.marketoracle.co.uk/Article950.html