GE Capital Direct: new online savings bank launches

A new online savings bank launches today, promising to put savers first.
GE Capital Direct is a branch of business financing firm GE Capital, which itself is part of GE - what used to be known as General Electric.
With backing like that, there’s potential for GE Capital Direct to make a serious splash in the UK savings market. Savers will have to wait a while for that splash though, as the bank’s initial products are a touch on the bland side.
Keeping things simple
GE Capital Direct has started things off with two easy access savings accounts. On the plus side, these accounts really do live up to their name, as savers aren’t penalised for accessing their cash. That is not always the case with leading easy access accounts.
The trouble is the rates of interest savers will enjoy aren’t exactly going to set the heart racing. Here are the two deals:




Account name


AER


Bonus?


Minimum deposit


Withdrawal limits?






GE Bonus Saver


2.65%


1.15% for first 12 months


£500


No




GE Saver


2.35%


-


£500


No




The best easy access savings accounts
Now let’s take a look at the five accounts offering the very top interest rates on easy access savings:




Account name


AER


Bonus?


Minimum deposit


Withdrawal limits?






Nationwide MySave Online Plus


3.17%


1.62% in the first year


£25,000


One free withdrawal a year




Coventry BS Online Saver


3.15%


1.15% in the first year


£1


Four penalty-free withdrawals per year




ING Direct Savings Account


3.10%


2.56% in the first 12 months


£1


No




Derbyshire BS NetSaver


3.06%


2.06% until 30 June 2013


£1


No




Post Office Online Saver


3.01%


1.36% in the first year


£1


No




As you can see, GE Capital’s Bonus Saver is nowhere near competing with the top accounts in the easy access market.
[SPOTLIGHT]That said, I’d ignore the Nationwide MySave account, which is frankly a bit mental. If you have £25,000 in savings, it’s highly unlikely that you need to keep all of that in an easy access account, and would be far better off putting at least some of that money into a bond. The fact that only one withdrawal is free further confirms that this account is an easy access account in only the loosest sense.
Bonus season!
It is noticeable though that all five of the top paying accounts boast pretty sizeable bonuses. This is a ploy used by savings providers to bump up the rate for the first year, to make the accounts look even more enticing to savers.
The trouble is that 12 months down the line the rate of interest plummets, leaving savers to find a new home for their cash in order to get a decent return.
Thankfully, there are a few accounts that skip this charade altogether. Let’s see how GE’s own simple savings account, the GE Saver, compares to the best of the non-bonus-paying accounts.




Account name


AER


Minimum deposit


Withdrawal limits?






West Brom WeBSave Plus


2.81%*


£1,000


One free withdrawal a year




Aldermore Easy Access


2.75%


£1,000


No




Sainsbury’s Bank eSaver Special


2.70%


£1,000


No




Barnsley BS Online Saver


2.50%


£1


No




Allied Irish Bank Easy Access


2.50%


£1


No




*Rate is dropping to 2.56% from 21st May
So, with a rate of 2.35%, the GE Capital Saver isn’t that far off the bonus-free accounts. But it’s still not enough of a rate to get savers too excited, in my view.
Starting slowly
First of all, let’s be honest. The rates across the board from easy access accounts are pretty rubbish.
It’s very difficult to get excited about a return of 3% on the money you squirrel away. Sadly, that’s part of the sacrifice you make if you want to keep your cash close at hand. You will get a better rate if you lock your cash up in a bond, as we explain in Get the best savings account for your situation.
So why isn’t GE Capital making a statement with far better rates?
The reasoning for launching with products like this seems pretty clear to me. This is a new bank, with new systems to get on top of, a new brand to build. The last thing it wants to do is overexpose itself by launching with a market-leading rate and then making a hash of handling all of applications.
Why I’m optimistic
The one thing that really encourages me about GE Capital is that the bank was at pains to emphasise to me how much it wants feedback from its customers. Only time will tell whether it backs up its words, but for now I’m giving the bank the benefit of the doubt. A bank that empowers its customers and takes their views into account could be a powerful player in the savings market.
So for now we will likely have to put up with the odd mediocre account until GE Capital has its feet under the table. Hopefully at that point, given its backing, it will be able to give the big boys a run for their money and launch some accounts that we will all want to sign up for.
With the savings market in the doldrums, a new bank that’s keen to compete and listen to savers has to be a good thing.
More on savings:
NS&I inflation-linked certificates: your best alternatives
Easy access, notice accounts, bonds, ISAs: get the best savings account for your situation
The best instant access savings accounts with no bonus
The best supermarket financial products