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The best supermarket financial products
Going with a financial deal from your supermarket could leave you considerably better off.
Tesco and Sainsbury's are encroaching more and more into selling us financial products, from savings to loans to insurance.
They haven't got tangled up in the messy, complicated business that has recently destroyed several of the UK's banks and building societies. As a result, they continue to offer many better products and take more customers away from traditional financial institutions.
Savings accounts
Just last week, Tesco increased some of its savings rates further to ensure it stays at the top of the best buy tables.
The top one-year fixed rate savings accounts
Savings account | Interest rate | Minimum deposit |
3.5% | £2,000 | |
3.45% | £2,000.00 | |
Aldermore 1 Year Fixed Rate Savings Account | 3.35% | £1,000.00 |
I have excluded accounts that are not online, but none of those beat Tesco anyway.
None of these top three savings accounts come from renowned financial institutions, which is a demonstration of how poorly the major banks are able to compete right now. As we now know, being with a big bank doesn't make you all that much safer.
Savings in all three accounts in the above table are protected by the Government in the Financial Services Compensation Scheme. Tens of thousands of pounds of your savings could be protected by the guarantee offered by the scheme.
[Related link: The most-popular savings accounts]
Credit cards for new purchases and balance transfers
Sainsbury's narrowly misses out on being in the top five credit cards for both balance transfers and new purchases.
The Sainsbury's Shopper card offering 12 months at zero interest on both types of borrowing is some way off from the Nationwide Select card. The latter offers 17 months on balance transfers (3% fee) and 18 months on purchases. However, you have to open a whole new bank account to get the Nationwide account, which is more effort than some people are willing to make.
[Related link: Top 0% combined credit cards]
Credit cards for new purchases only
But when it comes to credit cards that offer 0% interest on new purchases only, Tesco and Sainsbury's peform again, coming joint second:
The top credit cards for new purchases
Credit card | Length of 0% deal on new purchases |
18 months | |
15 months | |
Sainsbury's Nectar Credit Card | 15 months |
M&S (HSBC) Credit Card | 15 months |
Tesco Clubcard Credit Card | 15 months |
[Related link: Compare 0% new purchase credit cards]
Personal loans
Tesco makes it into the top five on personal loans.
Top five personal loans for those with excellent credit ratings
Personal loan | Interest rate* |
6% APR | |
6% APR | |
M&S (HSBC) Personal Loan | 6% APR |
6.1% APR | |
HSBC Existing Customer Loan | 6.2% APR |
*Half of applicants will get a higher interest rate than the one advertised
With all these loans, if you borrow £7,500, you're looking at repaying around £145 per month for five years, so at least £1,140 in interest. Be sure that you need to borrow, because that £1,000+ could be useful to you.
Sainsbury's has a loan charging just 6.1% APR, so why doesn't it get into my table? Because it forces you to wait three months to make your first repayment. During this time, interest is charged and compounded on the full debt. So the real cost is higher than the other loans in the table.
It's worth noting though that if you go for a £7,500 loan over three years, the interest rate drops below 6%.
Car insurance
Supermarkets are also competing with insurers.
It's difficult to make any generalisations about who's the cheapest insurer. However, I have run a few tests and found that on car insurance at least, Sainsbury's does pretty well against the competition, provided you have a Nectar card and use it often.
You might be entitled to a 20% additional discount (up from 15% a few months ago) on a policy that is already reasonably cheap for some people. Read more in Sainsbury's promising £300 of benefits with its car insurance.
But everyone is different, and Sainsbury's will not be competitive for everyone, so there is no substitute to shopping around for your car insurance.
[Related link: Search for a cheaper car insurance quote]
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