Money: Abbey needs to clean up its act

Nic Cicutti
Friday 15 May 1998 19:02 EDT
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Doing the housekeeping may mean one thing to most of us, but to Abbey National it clearly has a completely different meaning.

To the Abbey, a "housekeeping measure" was the term given this week to a cut of up to 0.3 per cent in the rates paid on some of its savings accounts.

The bank justified the move by arguing that interest rates are falling - although there was no evidence of this as far as variable mortgage rates are concerned: Abbey National is keeping them firmly at their current 8.7 per cent level.

Meanwhile, savers who want that little bit extra interest could do worse than take a look at Save & Prosper's opportunistic launch of a Fast-Track ISA, a reference to the Individual Savings Account which is being introduced in April 1999.

Save & Prosper's account will pay 6 per cent gross on lump-sum investments of pounds 3,000 or pounds 4,000, or 7.2 per cent gross on sums between pounds 5,000 and pounds 7,000 - in pounds 1,000 multiples.

If investors transfer their money into an equivalent Save & Prosper ISA in April 1999 they will receive an extra bonus of 1.8 per cent on the sum invested, equal to about 9 per cent gross in total. S&P says it will not impose any hidden catches or exit penalties on its ISA, which is a 30-day notice account.

This means that should the account's rates not be competitive after April next year, savers could simply give 30 days' notice, close it and walk away with the equivalent of 9 per cent interest on their initial deposit. Now, that's what I call good housekeeping.

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