An extra 'silver lining' in savings accounts for the Over-50s?

An increasing number of banks and building societies, keen to cash in on the burgeoning grey pound market, are launching savings products aimed at the Over-50s. A recent study found that eight million 'empty nesters' aged between 50 and 64 will have £46 billion to spend by 2008. And providers are keen to grab a piece of the action.

There are currently 36 providers offering specialist accounts for the Over-50s market, with a range of terms, minimum balances, notice periods and account restrictions. With some allowing high levels of deposits and paying very competitive rates of interests, these accounts can look very attractive.

Finding the right nest for your egg...

"Many 50-something consumers have repaid their mortgage, seen their children leave home, and have a nest egg saved for their retirement," says Lisa Taylor of Moneyfacts.

"These people are looking for a safe home for their savings that offer a reasonable rate of return. But consumers opting for these specialist accounts should not assume they are getting the best deal available in the market.

"Rates on these savings accounts are competitive, but you shouldn't just look at accounts specifically for this age group, as some savings accounts are open to savers of all ages which offer slightly better rates depending on notice period and amount invested.

"For example, Sainsbury's Bank, Manchester Building Society and Chelsea Building Society all have savings products available to everyone with interest rates at a competive 6.25% gross or higher."

As with all products, it pays to shop around for the best Over-50s deals before signing on the dotted line. Some of these new accounts will expect you to jump over hurdles.

They might restrict the amount of money you can withdraw or only be available on the Internet, so ensure you choose an account that specially meets your needs. However, not all Over-50s accounts are gimmicks and a few do offer some of the best saving interest rates on the market.

Savings accounts for silver surfers

Coventry Sixty-Plus eSaver, available to those aged 60 and over, pays 6.40% gross interest annually until 30.06.08 and is variable thereafter. The minimum balance is £1 and maximum £250,000. But the account must be operated via the Internet.

Savers who want to invest more can put a minimum of £10,000 in Coventry's Sixty-Plus 60-day Notice. This has a slightly lower rate but pays interest monthly. However, this account has a one-year bonus attached so the interest rate will drop after 12 months.

Northern Rock's Silver Savings Online account, paying 6.25% gross, is available to anyone over the age of 50 with a minimum investment of just £1. Again the account must be operated via the Internet.

Pensioners can earn up to 5.85% interest with the new Pension Plus account from Skipton Building Society. The account is available for opening balances of £500 to £15,000 and allows immediate access for withdrawals. It's available to customers aged 50 and over with at least one direct pension credit (state or private) into the account on a regular basis.

Cheshire Building Society 50 Plus Freedom account pays 5.75% gross on a minimum balance of £5,000 to a maximum of £2m, with the flexibility to withdraw and add to your account whenever you wish.

Over-50s savings accounts come with many bells and whistles. Some are instant access allowing you to withdraw money at a moments notice while others are notice savings account where notice has to be given to withdraw cash without penalty.

Minimum investment levels range from £1 and interest may be paid on an annual or monthly basis. Monthly interest is a good option for those looking for regular income from interest payments. Savings accounts are generally opened by branch, post, telephone or internet. Many include bonus rates of interest depending on the number of withdrawals made, so checking the small print before opening an account is key. Some accounts also require direct pension credit to be paid into the account regularly.

You can take advantage of good short-term bonus rates but you should review your account annually once these bonuses have expired, to ensure you are still getting the best possible deal.

15 July 2008 © Moneyextra.com

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