Jun 14 2006
Savers may be better off choosing an account that offers a consistently attractive rate that is not reliant on a short-term bonus, claims a financial provider.
Sainsbury's Bank is urging savers to be on their guard against accounts which offer short-term bonuses as these can over-inflate returns and mislead savers.
For example, a no notice account advertised with an introductory rate of 4.23 per cent on £1,000 balances is likely to fall by 0.63 per cent when the bonus expires, making the new rate just 3.6 per cent, according to the bank.
Sainsbury's offers savings accounts at 4.7 per cent for balances of £1 and promises to pay above the market average rate of interest on all savings accounts until 2010.
Peter Wood, director of savings at Sainsbury's Bank said: "There is nothing wrong with short-term bonuses as long as savers are aware of them and have taken into account what their long-term interest rate will be.
"However, it's easy to be drawn by an attractive rate so we'd urge savers to consider their returns beyond the point when a bonus expires."
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