Get more for your brass up north

Stories in the press this week about the possibility of rocketing interest rates will have sent shivers down the spines of a fair few homeowners. But it will have been music to the ears of many long-suffering savers fed up with pitiful returns.

Following the May 6 interest rate rise - the third since the beginning of November - we are now starting to get a few sightings of a previously endangered species: the 5%-plus savings account.

Yorkshire building society is next week launching an intriguing account that will never pay less than 5.25% gross and could end up pay ing more than this, provided you are prepared to lock away your cash for two years. And Northern Rock and Skipton building society have both brought out accounts that scrape into the 5% club.

Meanwhile, there are some decent accounts bubbling just below 5%, such as Alliance & Leicester's Online Saver account, paying 4.85%.

Most commentators think base rates (currently 4.25%) are likely to end this year at around 5% or 5.25% ( that is, another three or four quarter-point rises), and some reckon they could hit 6% next year.

So Yorkshire building society is likely to find plenty of takers for its "Guaranteed Savings Tracker", to be launched on Tuesday and will guarantee to pay the higher of 5.25% or the Bank of England base rate over a two-year term.

In other words, if interest rates stay or go below 5.25% during that period, you'll get 5.25%. And if they go above 5.25%, the account's rate will match the base rate.

The account is available from the society's 131 branches or by post, and comes with a passbook. The minimum investment is £100 and the maximum is £500,000. You are allowed to make additional deposits but only while the account remains available to new investors. The account will run until July 31, 2006, and after that you will have instant access to your funds.

The only catch is that there's no access to your money during the two years, with account closure subject to 180 days' loss of interest. So it's definitely not a home for cash you might need in the next couple of years. A spokesman says that the account "is aimed squarely at the typical building society investor who wants value for money and no risk, yet wants to maximise returns on their savings".

The society launched the account in response to member feedback which indicated there is uncertainty in savers' minds about how far and how fast interest rates are likely to rise. Many are not sure whether to go for a variable rate account or a fixed rate product. However, it's quite possible that if there is heavy demand for the account, it will close to new investors quite quickly.

Meanwhile, Northern Rock's Tracker Online internet-based savings account will pay 5.01% gross interest from Tuesday, up from the current rate of 4.76%. This account has a minimum balance of just £1 but it's important to be aware that the 5.01% rate includes an intro ductory interest bonus of 0.71% which only lasts for six months. So the underlying rate is 4.3% - still, of course, a good rate. This account also comes with a guarantee: that the interest rate will be no lower than 0.5% below the Bank of England base rate until further notice.

Last week, Skipton building society launched its Branch Access account paying 4% gross, plus a 1% interest bonus for the first three months only, giving an initial rate of 5%. The minimum opening and operating balance is £500 and the maximum is £5,000, so you can't stash away huge sums in it.

Skipton says that with this new account, "you can enjoy similar (or better) returns to many internet or postal accounts - but via your local branch". It offers easy access to your cash but all transactions must be made by cheque to save on admin costs, adds a spokeswoman.

For those happy to sign up for an internet-based account, financial data provider Moneyfacts (moneyfacts.co.uk) also highlights Alliance & Leicester's Online Saver, which pays 4.85% and can be opened with as little as £1. You can transfer money to and from the account via a current account of your choice and there is no notice period for withdrawals.

There are several fixed rate accounts paying 5%-plus but many of these require quite large minimum deposits or mean you have to tie up your cash for several years (or both). However, Birmingham Midshires is offering a one-year fixed rate account paying 5.45% gross with a minimum investment of £1.

The Halifax still has its Regular Saver account offering a fixed 6% before tax to those willing to save a set amount (between £25 and £250) every month for a year.

... And an Isa result down south

Cheltenham & Gloucester has launched a mini cash Isa that is paying 5% for one year on all deposits over £1,000.

The Isa, which is available for a minimum of 12 months, will pay the 5% tax-free on balances up to £3,000 until 12 July 2005.

Those wanting their money back early should give 30 days' notice, or face losing 90 days' interest.

These products are very popular at the moment. When Abbey launched a 4.85% cash Isa two weeks ago it was deluged with applications. At one stage 15,000 completed forms were backed up in its offices, but the bank says the backlog will be cleared soon. If the C&G Isa proves similarly successful, it too could close early.

Those hoping to add to their initial £1,000 investment later in the year may then find the offer has closed. In that instance savers could lose some of their tax-free entitlement.

To open a C&G Isa go to your nearest branch or call 0800 717505.