Saving grace as interest rates climb

Saving grace as interest rates climb

Kerching! This week and next will see thousands of City high-fliers pocketing bumper bonuses following what was generally regarded as a very good 2006 for the denizens of the Square Mile.

A survey by Barclays Wealth's international personal and premier banking division, shows that one-third of this year's £19bn bonus pot is expected to be paid out in January, with this week cited as the most likely for City workers to receive their lump sum. Some will already know exactly what they want to do with the cash, but others will want to park it somewhere while they mull over their options.

If you are looking for somewhere to stash a large amount of money, whether a bonus, an inheritance or the proceeds of a house sale, there are several private banks offering decent-paying accounts for those able to stump up a five-figure sum.

Investec Private Bank has the High 5, which pays an impressive 5.69% gross interest. The minimum investment is £25,000 and the maximum, £100,000. It is one-year only and pays the average of the five highest savings rates on the market, "so you never have to shop around again for the best rates". If you need to withdraw money before the year is up, you must pay a 0.5% "fee" (minimum £50).

Meanwhile, Kaupthing Singer & Friedlander, the UK arm of Iceland-based Kaupthing Bank, has a 90-day premier base rate tracker which pays 5.5% gross. Minimum balance is £25,000.

For those who really want.....continued below

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to display their uber-wealthy credentials, the Queen's bank, Coutts, has the private reserve account, which offers its highest interest rate to those able to stash a cool £1m within its gilded vault. It sounds exceedingly grand, but there are two caveats. The rate for balances of £1m or more is a not-stunning 5.05%. And this isn't just a millionaires' club; surprisingly, the account has a minimum balance of just £1 (though someone putting in a quid would only get 2.5% interest).

It is heartening to discover that the same account tops the easy access "best-buy" table, whether you have £250 or £250,000 to invest. Icelandic bank, Landsbanki's Icesave internet account, pays 5.7% and comes with an attractive guarantee: the rate will exceed the Bank of England base rate by at least 0.25% until October 2009, and will be at least the same as the base rate until October 2011. Icesave pays the same rate of interest, whatever the balance, and the minimum amount needed to open one is £250. The maximum you can invest is £1m.

According to Moneyfacts (moneyfacts.co.uk), the next highest no-notice rate is offered by Manchester building society, whose premier bonus account pays 5.61% - which includes a 0.3% interest bonus for six months. The most you can deposit is £75,000, while the minimum is £2,500.