Moneyfacts.co.uk has revealed that the price contest between supermarkets and banks is hotting up.
According to the comparison site, supermarket giants Tesco and Sainsbury’s have both increased their savings account interest rates and also offer competitive rates on credit cards, loans and life assurance.
The Tesco savings account is one of the best performing with an interest rate of 3% on its Internet Saver Account. Meanwhile Sainsbury’s is offering 2.90% interest on its internet savings account, said Moneyfacts.co.uk.
However, Moneyfacts.co.uk said an Egg Savings Account is still the best internet savings account on the market, at a rate of 3.25%.
Michelle Slade, spokesperson at Moneyfacts.co.uk comments: “Many consumers are disillusioned with traditional banks and instead are looking for an alternative provider for their finances. The combination of competitive deals and a strong brand that consumers already know and trust is a real winner for the supermarkets.”
Last week, 65% of consumers polled in a Marketing Week commissioned study said they wouldn’t consider a financial product, such as a bank account, personal loan, or credit card, from outside the traditional banking sector.
However, Tesco Personal Finance proved the most popular non-traditional brand, with 20% of those polled saying they’d consider taking out a Tesco account.
Tesco recently announced it was opening a finance centre in Glasgow with the creation of 800 jobs.
The move is part of Tesco Personal Finance’s expansion programme, which will see it compete with High Street banks.
Tesco, which has a 30% share of the grocery market, already offers credit cards, savings accounts and insurance via its Tesco Personal Finance (TPF) brand and announced plans late last year that it could be offering mortgages later this year.
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