Ford enters savings market: how it compares
Car manufacturer Ford has launched into the UK savings market for the first time, offering a range of savings accounts and Cash Isas.
Ford Money products will be available online and by telephone, with the brand promising accounts which are “simple to manage and highly secure”.
Products include a one-year fixed saver at 1.32% and a variable Cash Isa paying 0.8%.
The bank is registered with the UK’s Financial Services Compensation Scheme (FSCS) so savers are protected on deposits of up to £85,000 in the event of a bank failure.
Ford is also offering a “best rate guarantee”, which means if you open a fixed savings account and the interest rate rises before you make your initial deposit, you’ll receive the higher interest rate.
“Savers are looking for competitive and fair savings products. That’s why we created a range of savings products and Isas that are easy to open, simple to manage and secure,” says Julian Hynd, chief deposits officer of Ford Credit Europe.
“Launching Ford Money is an exciting new chapter for the Ford brand. More importantly, it will help savers make their money work harder – now and in the future.”
A new brand in the savings market should always be welcomed. Ford joins the AA and Renault as motor-related firms offering savings accounts to consumers.
However, Ford Money’s initial range is limited to six products - none of which trouble today’s savings best buys. In the context of the savings market, this product range is more Ford Fiesta than Ford GT. See how its rates compare to the best best buys below.
|Ford Money product||Interest rate (AER)||Today’s best buy|
|Flexible Saver||0.85%||Yorkshire BS Single Access Saver – 1.15%|
|One Year Fixed Saver||1.32%||Paragon Bank One Year Fixed – 1.51%|
|Two Year Fixed Saver||1.50%||Secure Trust Bank Two Year Bond – 1.85%|
|Flexible Cash Isa||0.80%||Coventry BS Easy Access Isa – 1.05%|
|One Year Fixed Cash Isa||0.95%||Chelsea BS Fixed Rate e-Isa – 1.1%|
|Two Year Fixed Cash Isa||1.10%||Yorkshire BS Fixed Isa – 1.25%|
But it’s still early days and Ford Money has promised to expand its product range in future. More competition will also hopefully drive up savings rates, which are currently as exciting as a traffic jam on the M62.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
The Financial Services Compensation Scheme is the compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading, the FSCS may be able to pay compensation to its customers. Limits apply to how much compensation the FSCS is able to pay, and those limits vary between different types of financial products. However, to qualify for compensation, the firm you were dealing with must be authorised by the Financial Services Authority (FSA).
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.