We take a look at some of the products currently available to those over the age of 50 and how they compare with the rest of the market.
So-called ‘Silver savers’ are an attractive customer base to banks and building societies because many have accumulated a significant amount in savings over the years. And with financial institutions still desperate to attract money from retail savers because of ongoing funding shortages caused by the credit crunch, many see the over-50s as a key target market.
Saga has recently increased the rates of its fixed rate bonds. Its savings accounts are provided by Lloyds Banking Group (the new super bank formed following the merger of Lloyds TSB and HBOS).
Saga is offering a four-year fixed rate savings account paying 4.35% on balances of £1 or more. This is a market-leading deal among four-year fixed rate products, although you can earn slightly more if you are willing to lock your money away for five years. State Bank of India’s five-year HiReturn Fixed Deposit Account is paying 4.50%, for example (this is available to all savers, not just those over 50).
However, Kevin Mountford, moneysupermarket.com’s head of banking, doesn’t recommend that savers lock their money away for that long. Because the base rate is just 0.5%, the next move in interest rates is expected to be upwards. So while a rate of 4.5% may look attractive now, it might not be in five years time. If interest rates start rising within that time, you could find yourself stuck on a rate that becomes uncompetitive.
Mountford therefore suggests fixing for a shorter period of time. ICICI Bank has the highest paying two-year deal at 4.35%. This product is available to all savers and the minimum deposit is £1,000. Alternatively, Birmingham Midshires has a two-year fixed rate bond paying 4.25% on balances of £1 or more.
Saga’s two-year fixed rate account is paying 4.15%. However, one plus point of Saga’s fixed rate products, is that withdrawals are permitted during the fixed term, as long as 90 days’ notice is given. Most bonds don’t allow withdrawals during the fixed term, so the extra flexibility offered by Saga could prove quite attractive to some savers.
If it’s an easy access account you’re after, none of the accounts aimed specifically at older savers really stand out at the moment – unless you’re over 60. Market Harborough Building Society’s Onthedot 60+ Surfer is an internet account paying 2.35% on balances of £500 or more. There is no introductory bonus and unlimited penalty-free withdrawals are permitted.
You can earn a higher rate with one of the generic deals. ING Direct’s Savings Account has a rate of 2.75% and includes a 2.22% bonus. There are other accounts including Abbey’s eSaver Issue 2, Egg’s Savings Account and Alliance & Leicester’s Online Saver Issue 4 which are all paying 2.50%. As with the ING account, all of these deals include 12-month bonuses so you may need to move your money again in a year’s time.
Though there are a host of attractive current accounts on the market, very few are specifically geared towards those aged over 50. It can be more difficult to switch current accounts the older you are, particularly if you no longer earn a set income as many deals insist that you pay in a minimum amount each month.
Nevertheless, A&L has bucked the trend by offering a deal that not only targets the over 50s, but that is actually among the market leaders.
The A&L Premier 50 account offers a market leading credit interest rate of 5.0% on balances up to £2,500. It also has some of the most competitive overdraft terms available with a fee-free overdraft for 12 months – thereafter you are charged 50p per day for being overdrawn up to a maximum of £5 per month.
In addition it offers a number of added benefits including worldwide annual multi-trip travel insurance for customers up to the age of 79; health benefits including two out-patient private medical consultations; as well as identity protection and alerts. The travel insurance is an attractive benefit as many standard policies, particularly those offered as part of current account packages, only offer cover to those under the age of 65.
However, the A&L Premier 50 account does have a £10 monthly fee, so you’ll need to work out whether the benefits are worth the £120 annual charge
What are the alternatives?
There are plenty of other options on the market that target all account holders. These include the A&L Premier Direct which offers the same in-credit interest rate – 5.0% on balances up to £2,500 - and overdraft terms as the Premier 50 with no monthly fee, but without the added benefits. This is an online account so it’s only worth considering if you are happy to bank over the internet.
Similarly, the Premier Current Account, also from A&L, matches the Premier 50’s overdraft terms and so is well-suited to customers that fluctuate in and out of the red although the in-credit rate is lower at just 0.5% for balances up to £2,500. This account does include European travel insurance and there is no monthly fee, however the insurance only covers the under-65s.
Another current account worth considering is the Halifax Reward Account. Rather than paying interest on balances in credit, customers receive a £5 ‘reward’ each month as long as at least £1,000 is paid into the account.
If you keep a large balance in your current account, the Lloyds TSB Classic Account with Vantage pays 4.0% on balances between £5,000 and £7,000.
For more information on current accounts, read our article ‘What’s the best current account?’.
A number of insurers, including Saga and Rias, target the over-50s market. However, as it the case with all insurers, because premiums are based on risk, there is no single provider that is best – the price you pay will depend on where you live and your claims history, as well as your age.
Generally though, older drivers and homeowners benefit from cheaper premiums regardless of whether they are with a specialist provider or not because statistics show they are less likely to claim on their policy than younger people.
It’s therefore well-worth comparing prices, and the level of cover, every year when your home or motor insurance is up for renewal. Moneysupermarket’s home insurance and car insurance comparison tools make this task easy as we compare quotes from direct insurers and brokers in a matter of minutes.
As mentioned above, many standard travel insurance policies only cover the under-65s – while older people are less likely to claim on motor and home policies, they are more likely to make a claim on travel and medical-related insurance because of health problems.
Therefore, specialist insurers may well be the best place to go if you’re over the age of 65 and are looking for travel insurance. Age Cover, Saga and All Clear are among the travel providers that do not impose an upper age limit with prices tailored meaning consumers are not paying for the next age bracket before they get there. Some of these insurers will even accept travellers with pre-existing medical conditions. However, they may not be the cheapest and so it’s well worth shopping around to find the cover you need for your specific requirements. Our travel insurance comparison tool may help.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing. Products underlined can be applied for directly.