ING Direct and AA reprice easy access savings accounts

The battle between top accounts to provide the best home for your savings is heating up, with ING Direct and AA both improving their rates.

Last week I wrote about Coventry Building Society launching a new best buy in Coventry BS launches table-topping easy access savings account. Now ING Direct and the AA have repriced and are vying for your savings pot too. But have they really got anything better to offer?

New deals

ING Direct has hiked its easy access savings account rate to 3.24% AER, which includes a 2.69% bonus that is fixed for 12 months. This represents a 0.05% improvement on the previous deal (which paid 3.19%) and still allows savers to start saving from as little as £1 with unlimited withdrawals.

However, you won't be able to take advantage of this great deal if you have had an ING Direct savings account in the last six months.

The AA has also repriced the two tier savings rate on its Internet Extra account. The best offer on Tier 1 is for investments of £20,000 or more, where you could earn a rate of 3.07% (with a 2.57% bonus included). But if you only had £1 to start with, the rate you get with Tier 2 is a less exciting 2.60% (with a bonus of 1.9%).

The AA account is only available to manage online and requires savers to link a bank or building society to make transactions easier.

Rates war

The strategic moves from the AA and ING Direct could be the start of a new rates war over easy access savers like that seen in the personal loans market of late (find out more in  market-leading loan rates fall below 6%).

Let's hope more savings providers follow suit soon.

Just to get our bearings first, let’s take a look at where exactly these current changes have landed the accounts on the best buy interest rate scoreboard.

Latest easy access account scoreboard

Winning isn’t everything

Clearly if you are only looking for a top rate of interest, the Coventry Telephone Saver is still the place to go with an offer of 3.25%.

But should the interest rate be the only determining factor for this sort of account? Personally I think the bonus, convenience and the amount needed to get going should be considered too.

Other factors to consider

The AA and West Brom accounts require minimum deposits in the tens of thousands so those who are new to saving are automatically priced out of securing a good rate.

The same can be said for the Coventry deal. If you don't have £500 upfront you would be unable to secure the market leading rate. With ING Direct you only need £1 to get started and you would only lose out by a paltry 0.01%.

Another thing to consider aside from the headline interest rate is the size of the bonus.

The Coventry deal has a 1.25% bonus which pales in comparison to the 2.69% ING Direct is offering.

Lastly, how you want to manage your account is important too. The Coventry deal is only available to manage over the phone, which is great for those who can’t get on with the internet or are unable to visit a branch, but for those who want more flexibility ING Direct offers to have the account dealt with online and by phone.

Better home

Typically easy access accounts are great if you need cash on stand-by for an emergency and you have used up your Cash ISA allowance.

But you could find a better home elsewhere by locking your money away for a few months or a year. Check out the latest best buys in short-term fixed rate savings with a new fixed rate bond paying 3.65% from Coventry Building Society and consider the happy medium a notice account could offer in easy access vs notice savings accounts.

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