Banks pulling best buy deals off the market

Consumers searching for savings accounts offering best buy rates could have a difficult time getting the right products following revelations that banks are pulling the deals off the market.

According to Moneynet.co.uk, fixed-rate savings accounts have been arguably the most enticing element of the savings market throughout 2009, but unprecedented interest from savers has resulted in some of the products' withdrawals.

The organisation revealed that the last ten days alone have seen many top deals being withdrawn, which is likely to leave people coming to the end of attractive rates from one or two years ago struggling to find matching products.

Among the savings accounts that have been pulled are the Post Office's one-year deal offering 3.70 per cent and Melton Mowbray's one-year Christmas Bond paying four per cent, which was on the market for only three days.

Skipton Building Society's five-year savings account, which was offering 5.16 per cent, also lasted less than one week, according to Moneynet.co.uk, which linked the short lifespan of the deals to savers coming to the end of their current agreements.

Other products that have also disappeared from the market include Principality Building Society's 4.25 per cent two-year deal, as well as its 5.10 per cent four-year savings account.

Cahoot's 4.20 per cent two-year product, Britannia's five per cent three-year deal, the Co-operative Bank's five per cent three-year bond and Skipton Building Society's 5.35 per cent five-year account have also disappeared from the market.

According to Moneynet.co.uk's Andrew Hagger, the market for one and two-year terms, which is bustling with overseas and niche players, is particularly competitive.

"Some providers are seemingly paying over the odds to attract money from savers especially on the four and five-year fixed-rate [products]," he explained.

"If this is the case and base rate starts to climb at some time during 2010, the full benefit of any increase may not be passed on to savers as institutions may use it as an opportunity to regain some of their lost profit margin."

Meanwhile, those looking for a savings account offering one of the best deals in the market have been advised by financial expert John Fitzsimons of lovemoney.com to consider banking with the Islamic Bank of Britain.

Open to non-Muslims, the bank has a two-year fixed-term deposit savings account offering 4.5 per cent and can be operated with a minimum deposit of £1,000, the website said.

However, because the payment or receipt of interest is prohibited in Islam, deposits in the Sharia'a compliant savings account are placed into ethical investments, which will help the bank deliver the 4.5 per cent profit over the agreed term.

According to the author, the performance of the account is monitored on a daily basis and should there be concerns that market instability could hit returns, the bank will notify savers and they can decide whether to close it or stay put.