New way to savePost Office launches savings account

03 April 2006

The Post Office has announced it's taking on the big banks with the launch of its first own-brand savings account.

Post Office Financial Services' Instant Saver offers interest of 4.75 per cent a year, including a 1 per cent bonus for the first 12 months.

The account comes with a guarantee that the interest rate will be no more than 1 per cent below the Bank of England base rate. Customers will be able to access their account at any post office branch, as well as by phone or the internet. They can also withdraw money from post office cashpoints, and those in the Link network, for free.

The minimum opening balance is GBP 500. Account holders can make up to six withdrawals a year for free; after that, there's a GBP 1 fee each time.

Stamps price rise

The Post Office says that more than GBP 450 billion is sitting in bank and building society accounts that don't offer competitive rates or easy access. It claims if all this money was moved to its new account, consumers would receive an extra GBP 9 billion in interest during the first year.

Today also sees the price of a first-class stamp rising by 2p to 32p, while second-class stamps increase from 21p to 23p.

Royal Mail has signed up to an agreement with post regulator, Postcomm, which states that first-class stamps can't rise above 36p until 2010. Postcomm said the changes offered a 'fair deal' and were substantially less than Royal Mail wanted.