Mutuals lower minimum balance criteria

During the last few weeks, a number of building societies have drastically reduced the minimum opening balance required to open some of their accounts.

Rachel Thrussell, head of savings at Moneyfacts.co.uk, says: The savings market has become increasingly competitive over the last couple of years, and even more so recently with some of the high street institutions advertising products with headline grabbing rates.

As well as this aggressive headline rate led marketing to contend with, the growth of internet savings accounts from the likes of ING, AA, Cahoot and Northern Rock available from 1, has forced some of the mutuals to fight back in a bid to hold onto their share of customers.

As a result, a number of building societies have slashed the amount that customers need to deposit to open some of their accounts, in one instance this figure has reduced from 6,000 to 1.

This is great news for savers who dont have large sums to invest as they now have a larger range of accounts available to them to use as a home for their savings.

As far as the mutuals are concerned, it is easier for them to make these changes to maintain market share, rather than having to go through the rigmarole and associated costs involved in launching a brand new product.

We will be watching this situation closely over the coming weeks to see if the trend continues and whether this prompts a reaction from the banks and internet savings providers.