Cahoot cuts rate paid on its current account

Cahoot, the internet bank operated by Abbey National, this week cut the interest paid on its current accounts but still remains ahead of rivals.

Anyone with a balance of £1 to £50,000 in their Cahoot current account will see the interest rate drop from 4.5% to 4.1%. Savers with more than £50,000 will see their rate edge up slightly, to 4% from 3.9%.

Cahoot marketing director Tim Sawyer insists that the change was made to "standardise" the accounts and that the net result is that the bank will neither gain or lose.

The rate on the current account compares to the 3.5% paid by the newly launched Zurichbank.co.uk, 3.2% at Intelligent Finance and 3% at Smile.co.uk.

Cahoot is also launching a two-year fixed-rate deposit bond that guarantees an interest rate of 5% a year over the period.

Meanwhile National Savings has entered the invest ment market for the first time. The government's savings arm was recently rebranded National Savings & Investments in a £2m campaign, and this week's launch marks its first step into equities.

It is offering a Guaranteed Equity Bond which will match the rise in the FTSE100 over the next five years, up to a maximum gain of 65%.

So if the FTSE rises by 50%, then investors will receive 50%. If the FTSE rises 100%, then investors will pick up 65% and no more. And if the FTSE falls, the guaranteed element comes in. The worst that an investor can do is to be paid back their initial capital in full.

The bond is available until April 17 only and carries a minimum investment of £2,000. Contact 0845-964-5000.