Sainsbury’s Finance has turned up the heat on Internet savings providers after releasing a new high-interest account.

The instant access scheme is set to offer those who open an account, a variable rate of 3.00 per cent gross interest, available for the first 12 months, afterwards it returns to its standard rate of 0.5 per cent gross.

The product is available for a limited amount of time with the account due to close on 5 October.

The minimum deposit needed to open the account is £1,000 and the maximum allowance is £500,000. There is a limit of three withdrawals during a 12-month period, if this is exceeded or the balance drops below £1,000 or even surpasses £500,000, within the first year, the rate of interest reverts back to 0.5 per cent.

Helen Cook, head of savings at Sainsbury's Finance said: "Despite a competitive savings market, our analysis shows that there are very few savings accounts paying rates of interest of 3.0%, so our new Online Saver account is extremely attractive."

Sainsbury’s maintain that from their research that only three per cent of instant access accounts pay three per cent gross on balances of £1,000.

Among other providers, Sainsbury’s do fall behind the best telephone and Internet account in the market held by ING Direct that pays out 3.2 per cent gross according to moneysupermarket.com, and only £1 is required to get the account up and running.

Santander owned Alliance & Leicester have the Online Save Issue 5, which requires the same deposit as Sainsbury’s but there is the ability to save up to £2 million in the account. While during the first 12 months, savers will receive a gross interest rate of 3.15 per cent.

Tesco Finance has a similar rate of interest as Sainsbury’s of 3.00 per cent gross for their Internet Saver account, although only £1 is needed to open the plan and after the rate returns to its standard of 1.25 per cent gross.

It is clear that Sainsbury’s have taken steps to make an impact in a highly competitive market, however customers will find that Sainsbury’s do fall short of some of their main competitors.