With the base rate now at its lowest level since records began, and many accounts teetering close to zero interest, it's becoming even harder to find good returns on our savings.
This article was first sent to readers as an email in our 'Afternoon' series.
But as the savings slump steepens, savers should also be thinking outside the box to cushion the impact of falling interest rates.
Earlier this month, I looked at how accounts with introductory bonuses could prove to be a blessing in disguise in the event of further base rate drops, as you are guaranteed a certain level of interest for a fixed period of time.
However, there’s another way to ensure you get a decent return. That’s to opt for a consistent savings account.
Measuring consistency
Consistent savings accounts should provide the highest returns over the long term. While they won’t necessarily offer the highest rates at any one time, they probably won’t drop suddenly six or twelve months down the line.
In this way, if you don’t have time to chase the best buy deals, consistent accounts allow you to relax in the knowledge that your money should always be working hard, even when you’re not paying attention.
According to Moneyfacts, here are the most consistent internet accounts over three years:
| Account and Provider | Interest Rate (AER) | Minimum Deposit | Total Interest Earned on £1,000 over 36 months |
|---|---|---|---|
| Sainsbury’s Internet Saver | 1.75% | £1 | £53.42 |
| Nationwide e-Savings | 1.95% | £1 | £59.65 |
| Coventry BS Netsave Instant III | 2% | £1 | £61.21 |
| Norwich and Peterborough BS NetmasterGold Save II | 1.5% | £1 | £45.68 |
| NatWest e-Savings | 1.3% | £1 | £39.51 |
Based on interest earned on £1,000 in 36 months. Interest shown is tax-free.
For those who aren’t keen on internet accounts, here are the most consistent no notice accounts over the same period.
| Account and Provider | Interest Rate (AER) | Minimum Deposit | Total Interest Earned on £10,000 over 36 months |
|---|---|---|---|
| Beverley BS Postal Account | 2.45% | £5,000 | £753.15 |
| Teachers BS Call Save | 2.1% | £1 | £643.32 |
| Britannia BS Direct Saver | 2% | £100 | £612.08 |
| Bath BS Direct Saver | 2.7% | £2,500 | £832.07 |
| Chesham BS Save Direct 2nd issue | 2% | £2,500 | £612.08 |
Based on interest earned on £10,000 in 36 months. Interest shown is tax-free.
Looking at the tables above, you could be forgiven for thinking we’re throwing you slightly off the savings scent. After all, with rivals such as ING paying 4% to new customers, these accounts offer meager returns in comparison.
But, as many ING customers already know, table-topping accounts don’t always stay that way over the longer term, and while new customers can still enjoy a juicy rate of 4%, ING’s long suffering existing customers have borne the brunt of the savings cull, and currently receive just 2% AER.
Building societies rule
The tables also illustrate the strength of building societies when it comes to consistency, with 79% of the most consistent accounts provided by mutuals.
The most consistent provider overall, Principality, is also a building society. Its e-SAVER has provided the best returns over 18 months and its e-ISA is second only to Egg over the same period.
Over the longer term, Sainsbury’s Internet Saver provides the most consistency across three years. This humble savings account has been in the consistency tables for some time, and while past performance doesn’t guarantee future returns, my bet is the supermarket will still feature for years to come.
Of course, if you are someone who is happy to chase best buy deals, there’s no reason why you shouldn’t always opt for the top paying account.
Just remember that when it comes to the current climate, apathy doesn’t pay. So keep one eye on the rate you’re getting, and be prepared to switch if required.