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Saturday, August 23, 2008

IceSave

As most people familiar with the concept of compounding know, two major factors that impact how much money you accumulate over a period are time and the rate of return (interest rate) on your investment. For example, 10,000 invested at 5% for 1 year grows to 10,500 but the same sum of money invested for 18 years at 5% grows to about 24,066 or 129% more. That’s why many financial experts recommend saving early for kids' education and other needs because given sufficient investment time, even small amount of money become large over the years. Of course, the other advantage is that it’s easier and less painful to regularly save small amounts of money rather than coming up with large amounts of money at once.

Besides the length of investment horizon, another important variable in wealth accumulation is the interest rate; the higher the interest rate, the larger will be the amount. Fortunately, there are many investment vehicles available that can provide decent interest rates on your investments, ranging from savings accounts to CDs to mutual funds (with or without the use of Coverdell Education IRAs) etc.

If going with savings accounts, different bank and financial institutions offer different interest rates, so it always pays to shop around. Fortunately, internet has made the task of comparing interest rates easier as there are many sites that let you do the comparison.

For UK residents, one bank that offers high, competitive interest rates on online savings account is icesave.

icesave is an Iceland-based bank owned by Landsbanki, a large and diversified financial services provider active in a variety of segments, including retail and corporate banking, capital markets services, investment banking, asset and wealth management.

icesave currently operates in the UK and the Netherlands. The bank offers different types of savings account for the UK residents, including the following:

- Easy Access Individual Savings Accounts (ISA)
- 2-Year Fixed Rate Savings Accounts
- 3-Year Fixed Rate Savings Accounts

Product details for each of the above account type are provided at the end of this post.

Currently, all these accounts pay a variable interest rate in excess of 6%. The bank is able to offer high interest rates as it doesn’t have an extensive network of branch, which reduces its cost structure. Instead, the customers manage their accounts online, with ability to call its UK based call center, when needed.

As per the info on its Web site, icesave offers high savings rate without any "catches or penalties". According to its Web site, icesave has won several independent awards for the excellence of our savings accounts, and is consistently included in best buy tables.

Just as FDIC-insured banks provide protection up to a certain amount in the US in the event of the bank’s failure, icesave offers the same level of financial protection as every bank in the UK. As part of what is known as the passport-scheme and using two different compensation schemes, in the event of the bank's failure, icesave provides 100% of the first £35,000 of total deposits held with it. Of course, as always, it is prudent to do your own research before investing your money with any bank, including icesave. In addition, considering the high rate of bank failures in recent years, it pays to continuously monitor the health of your bank and ensuring that your deposit amount remains below the protected limit.

The product details, including savings details, application criteria, introductory rates, rates, managing account and fees & charges for each of the three savings accounts mentioned above are currently as follows (Source: icesave):

Easy Access ISA:

Saving Details

The Easy Access ISA currently pays 6.1% variable AER (annual equivalent rate), with this rate guaranteed to be at least 0.3% above UK base rate till March 1, 2011. As per the icesave's site, the application criteria and other details are as follows:

Application Criteria

Existing Customer Only: no
Minimum Age: 18
Restricted Availability: no
Area Restrictions: none
Minimum Investment: £1000.00
Minimum Balance: £1000.00
Monthly Minimum: 0
Maximum Investment pa: 3600
Maximum Balance: Unlimited

Introductory Rates

Introductory Bonus: 0%
Incentives Offered: yes

Rates

Tax Free: yes
Open-ended Bonus: 0%
Rate Tiers: no
Fixed Interest Rate: no
Interest Payment Freq: Interest is paid monthly.

Managing Account

Passbook: no
Transactions at Branch: no
Statement Frequency: annually
Transactions by Phone: no
Transactions by Internet: yes
Transactions by Post: no
Special Access: no
Withdrawal Conditions: no
Transfers In: yes
Transfers Out: yes

Fees & Charges

Trans Notice/Pen/Charge: no notice, penalty or charge
Transfer Notice: 0
Transfer Penalty: 0
Transfer Charge: 0
Withdrawal Notice: 0
Withdrawal Penalty: 0
Withdrawal Charge: 0
W/d Notice/Penalty/Charge: no notice, penalty or charge

2-Year Fixed Rate Savings Accounts:

Savings Details:

Account Type: Term
Rate Type: The type of interest rate is fixed.
Headline Interest Rate: The headline interest rate is 7.06% AER.

Application Criteria

Existing Customer Only: No
Minimum Age: The minimum age is 18 years.
Restricted Availability: No restricted availability.
Area Restrictions: There are no area restrictions.
Minimum Investment: The minimum investment required to open this account is £1000.
Maximum Investment: The maximum investment allowed on this account is £2000000.
Minimum Balance: The minimum balance is £1000.

Introductory Rates

Introductory Bonus: No introductory bonus payable.
Incentives Offered: There are no free gifts or incentives offered with this account.

Rates

Tax Free: This product is not tax free.
Open-ended Bonus: No open-ended bonus payable.
Fixed Term: The fixed term is 2 years.
Fixed Term in Months: The term is 24 months.
Fixed Interest Rate: The interest rate is fixed.
Fixed Rate Period: The interest rate is fixed for 2 years.
Term Period: The account term is 24 months.
Interest Payment Freq: Interest is paid monthly.

Managing Account

Passbook: A passbook is not provided when this account is opened.
Transactions at Branch: Transactions cannot be made at a branch.
Statement Frequency: Statements are issued on-line.
Transactions by Phone: Transactions cannot be made by telephone.
Transactions by Internet: Transactions cannot be made by Internet.
Transactions by Post: Transactions cannot be made by post.
Special Access: Withdrawals are not permitted.
Withdrawal Conditions: Withdrawal Conditions -
Withdrawals are not permitted during the term.
Closure Before Maturity: Closure of this account is not permitted before maturity.
Transferred on Maturity: If no instructions are received from the customer before the account matures the balance is transferred to an easy access account.

3-Year Fixed Rate Savings Accounts:

Savings Details:

Account Type: Term
Rate Type: The type of interest rate is fixed.
Headline Interest Rate: The headline interest rate is 7.06% AER.
Application Criteria
Existing Customer Only: No
Minimum Age: The minimum age is 18 years.
Restricted Availability: No restricted availability.
Area Restrictions: There are no area restrictions.
Minimum Investment: The minimum investment required to open this account is £1000.
Maximum Investment: The maximum investment allowed on this account is £2000000.
Minimum Balance: The minimum balance is £1000.

Introductory Rates

Introductory Bonus: No introductory bonus payable.
Incentives Offered: There are no free gifts or incentives offered with this account.

Rates

Tax Free: This product is not tax free.
Open-ended Bonus: No open-ended bonus payable.
Fixed Term: The fixed term is 3 years.
Fixed Term in Months: The term is 36 months.
Fixed Interest Rate: The interest rate is fixed.
Fixed Rate Period: The interest rate is fixed for 3 years.
Term Period: The account term is 36 months.
Interest Payment Freq: Interest is paid monthly.

Managing Account

Passbook: A passbook is not provided when this account is opened.
Transactions at Branch: Transactions cannot be made at a branch.
Statement Frequency: Statements are issued on-line.
Transactions by Phone: Transactions cannot be made by telephone.
Transactions by Internet: Transactions cannot be made by Internet.
Transactions by Post: Transactions cannot be made by post.
Special Access: Withdrawals are not permitted.
Withdrawal Conditions: Withdrawal Conditions -
Withdrawals are not permitted during the term.
Closure Before Maturity: Closure of this account is not permitted before maturity.
Transferred on Maturity: If no instructions are received from the customer before the account matures the balance is transferred to an easy access account.

Fees & Charges

Withdrawal Notice: Withdrawals are not permitted.

For complete details on icesave's saving accounts, see:

icesave

Labels: frugal

posted by Ruby @ 7:42 AM

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