Higher interest savings rates 'likely to have conditions attached'

A new report has warned people to be wary of high savings interest rates in the current low base rate environment.

Consumer magazine Which? says that banks offering deals paying between five to eight per cent on regular savings accounts are not as attractive as they first appear.

Rates are likely to have strict conditions attached, including minimum monthly payments, and interest loss penalties for withdrawals, it claimed.

According to Which?, the best rates are reserved for those with a current account at the same provider.

Savers have been hit hard over the last 18 months, with the Bank of England keeping its base rate frozen at 0.5 per cent since March 2009.

This has proved disastrous for those seeking to generate an income on their cash stores, but conversely, people with tracer mortgages have benefited from lower monthly repayments. 

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2010-08-27 11:58:33 © Moneyextra.com