I have just finished my fifth week of training at The Co-operative Bank. My manager wants me to get an overview of savings products offered by The Co-operative Bank. As a task I am requested to select three savings products that will be used by two different customers.
Teenagers and students will make use of savings products to save for things such as university fees, driving lessons or a car. They could make use of Premium Bonds, Direct ISA or a savings account.
Teenagers and students will make use of Premium Bonds as a means of saving. Premium Bonds are a government security that offers no interest or capital gain but is entered in regular draws for cash prizes. Premium bonds can give the saver prizes from £25 to £1 million of tax free cash. However, this money doesn’t earn any interest but can be withdrawn at any given time with no penalties. You can enter online or on the phone if you are 16 or over and can invest anything from £100 to £50,000. People ages 17 to 22 can invest in premium bonds as it’s a better opportunity to win some extra cash that they can save.
They could also use Direct ISA’s. An ISA is an individual saving account which allows individuals to hold cash, shares, and unit trusts free of tax on dividends, interest, and capital gains. Alike to Premium Bonds, ISA’s are tax free, but in contrast they allow interest to be earned. The rate is variable but currently it is at 1.25%. This money can also be withdrawn at any time and anyone 16 and over can save anything from £1 to £15,240 in a year. ISA’s may be more useful for teenagers and students as they may want to be earning interest rather than hoping they win something from a Premium Bond.
Lastly, teenagers and students will use saving accounts. A savings account is a deposit account held at a bank or other financial institution that provides principal security and a modest interest rate. Similar to Premium Bonds and ISA’s the money can be withdrawn with no penalties and can be made anyone over 16 on the phone or online. However, the interest that is earned in a savings account which currently is 1.10% is taxable. Anything from £1 to £2million can be saved in the savings account per person. Teenagers and students may make use of savings accounts because they may want to save for things like university and they can earn interest whilst saving.
Another customers such as young families will make use of Children Bonds, Income Bonds or Investment Accounts. Young families will mainly be saving for their children but perhaps will be saving to buy a house or go on holiday with the family.
Children Bonds are a savings account made by the parents to save money until they are 16. Children’s bonds last 5 years and is tax free for the parent and child and interest of 2.5% can be earned. £25 to £3000 can be saved online, through post or on the phone and can be withdrawn but a penalty of 90 days’ worth of interest will be lost. Young families will use children bonds to save money for their children for when they are older.
Young families will also use Income Bonds. Income Bonds are A type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments being paid only if the issuing company has enough earnings to pay for the coupon payment. In Income Bonds interest of 1.25% is earned every month unlike other saving products but is also taxable. Anyone 16 and over can have Income Bonds that £500 to £1million can be saved online, through post or on the phone. Young families will use income bonds if they want to obtain interest monthly instead of every year.
The last product young families may use is an Investment Account. An Investment Account held at a financial facility for the purpose of a long term investment for capital preservation, growth or fixed income. Investment accounts earn a low amount of interest of 0.75% and is taxable but it can be withdrawn at any time with no penalty. £20 to £1million can be saved through the post by anyone 16 and over. Young families may make use of an Investment Account if they prefer it over more modern accounts over the internet or phone.
I now have vast knowledge on the savings products that The Cooperative bank have to offer people of all ages.