Here's a savings account that would top the table - if it wasn't such a big secret! Plus an ethical way to earn 6.75% whilst helping your fellow man (no banks included).
Despite the recent rise in interest rates, the table-topping savings accounts haven't been jumbled around much. This isn't good as lack of competition means no pressure for banks to provide a better service. So, if you're looking for alternatives to top savings accounts such as those from Birmingham Midshires, ICICI Bank or Alliance & Leicester, here are some ideas.
A secret savings account
There's a little known savings account, which, presumably due to its quirky sales structure, doesn't yet show up in any savings-account comparison tables (at least none of the ones I checked). This is despite paying the highest rate of interest of any easy access savings account!
I'm talking about the London & Country Fixed Easy Access Account. It pays 5.65% AER, which is fixed until 30 September 2007. From 1 October 2007 until 31 March 2008 the rate is guaranteed to match the Bank of England base rate. The minimum balance is £2,000 and the maximum is £500,000. Interest is paid annually.
There is a string attached, although it's a pretty string as far as strings go. If you withdraw money within the fixed period (i.e. before 30/09/07) the money you've withdrawn will get reduced interest. Still, it's only reduced to 4.25%, which beats the majority of savings accounts!
Get more details or apply now.
A hidden gem
If you're fed up with relying on banks, here's one way to cut them out of your savings: lend money to other individuals through the lending and borrowing exchange Zopa. OK, this is perhaps more of an investment, rather than a savings account, but it seems like a pretty safe bet for most lenders (or savers, investors, or whatever you want to call yourselves).
You can lend as little as £10 for one to five years. Latest figures from March this year show that the average gross return is 6.8% before bad debt. So far, the average bad debt is just 0.05%, which means that after predicted bad debt you're looking at an average 6.75% return.
You can choose to lend to good credit risks, excellent credit risks, or both. Zopa doesn't lend to anyone else, which helps to explain the low level of bad debt. As long as you lend more than £500, your money is spread out over at least 50 borrowers. Plus, you help out other people by giving them decent loans, so that they don't have to rely on banks either! A truly Foolish way to do business.
Learn more about Zopa.
> Compare savings accounts through The Fool.
