InvestmentsNov 24 2015

Product review: Skipton base rate tracker

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Product review: Skipton base rate tracker

Skipton Building Society is now offering a bank account that pays a return guaranteed to beat the Bank’s base rate.

The Easy Access Savings account pays 0.7 percentage points above the central banks rate, even in the case of a rate rise. The base rate is at 0.5 per cent, meaning that the account will initially pay 1.2 per cent and will rise or fall accordingly as the bank’s rate changes.

The minimum investment to open an account is £1, up to a maximum of £10,000. At the current rate, this means that the highest annual return an investor could receive is £120.

Skipton last offered this account in 2012 – four years into the historically low rate period. Kris Brewster, head of products at the building society, says talk of a possible base rate rise next year prompted the company to bring back the account. He says Skipton spotted a gap in the market for tracker savings accounts, which it believes make a good alternative to a traditional fixed-rate savings account.

The account can be opened at a Skipton branch or by post, and customers can pay in and withdraw from the account as often as they like without any additional charge.

www.skipton.co.uk

Comment:

As 2015 draws to an end, many analysts will come out with their forecasts for 2016. Looking back on the same forecasts last year, central bank policy predictions sound almost exactly the same.

Financial news over this calendar year has been saturated with speculation from any and every economist about when rates will go up, by how much, and whether the US or the UK will be the first for lift off.

There are two possibilities. The first is that rates will go up, in which case customers who purchase this account now will benefit from the guaranteed 0.7 percentage points on top of whatever the base rate may be.

Second, and most plausible from a business perspective, rates will not go up in the next 12 months, so this account will remain appealing to speculative customers but the company would not have to deal with paying more.

This account still offers a higher guaranteed return than many other savings accounts on the market and gives consumers a way to bet on whether they personally think that rates will go up.