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After the spending - encouragement to save

It's the season for spending. Perhaps the year for spending too if all the stories about re-mortgaging are taken into account, but Abbey National has other ideas and has introduced 'monthly saver', a new branch-based savings account that rewards monthly savers – guaranteed.

Aimed at people who are looking for a highly competitive interest rate and the discipline to save every month, Monthly Saver offers 4.00% gross p.a./AER to savers who deposit at least £50 per month. It is the only regular savings account with an interest rate guaranteed to be no lower than the Bank of England base rate, until 2004.

The Monthly Saver account can be opened with a minimum of £50 and requires a standing order of at least £50 per month.

Savers are encouraged to let their savings grow, as the account pays 4.00% gross p.a. interest each month where no withdrawals are made. For months when there is a withdrawal, or for any reason at least £50 is not paid in, the interest rate is 0.1%. This applies only for the month of withdrawal, unlike competitors' similar accounts, which cut interest rates for the full year.

Alexia Kilby, Abbey National's Head of Savings Marketing said:

"Many savers want to put money away for a special occasion, or build up a nest egg they can get at immediately if they need to. Regular saving also helps with paying for summer holidays or an extra special Christmas.”

“Monthly Saver offers a great rate as an incentive to save while still allowing access to savings when you need to make a withdrawal. Our customers have told us they like being rewarded with higher interest rates for not touching their savings. Monthly Saver meets this need."

Research shows many savers like a branch passbook-based account so they cannot easily withdraw their money with a cash card. Monthly Saver is operated by passbook and savers can pay into the account by standing order, making it easy to save. Interest is based on each month of saving unlike other accounts that require savings over the full year.

By making some simple changes to monthly expenditure, saving at least £50 per month without too much effort is possible. For example, when asked about their weekly expenditure:

• 35% of people said they spend between £10 and £20 per week on takeaways.
• 38% spend over £20 per week on eating out.
• 30% spend over £20 per week on alcohol.

By making the following changes, savings of £50 or £100 per month could be made.

Hide table

Old spending habits	New spending habits	Savings	New spending habits	Savings
Eating out 4 times a month	Eating out 3 times a month	£20	Eating out twice a month	£40
Takeaways 4 times a month	Takeaways 3 times a month	£10	Takeaways twice a month	£20
£20 per week on alcohol	1 week without alcohol	£20	Reducing alcohol spend by half	£40
Total savings		£50		£100

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