Top instant access savings accounts for small deposits
You don't need to have a small fortune to deposit to get hold of a best buy instant access savings rate.
The AA launched an instant access savings account earlier this month paying an interest rate of 2.57% AER. As more providers changed or launched deals in a bid for pole position in the best buy tables, the top tier interest rate for the AA Internet Extra (Issue 7) was lifted to 3.07%. This makes it one of the best easy access savings accounts, until you look beyond the interest rate.
That's because, as is the case every now and again, the better interest rate is reserved for those with plenty of money to save. You need to deposit £20,000 with the AA to get hold of this 3.07% rate. For savings below this threshold the rate falls to just 2.6% (including a 12-month bonus of 2.1%). And other savings accounts will pay more interest for a smaller deposit.
Other deals paying more
You only need to save £1 to benefit from ING Direct’s Savings Account rate of 3.24% AER. It’s available online or over the phone but only to new customers. Note that this rate includes a 2.69% bonus for the first 12 months.
It’s also worth noting that ING Direct isn’t covered by the Financial Services Compensation Scheme should the institution ever collapse, meaning your money wouldn’t be guaranteed by the UK Government. However, it is covered under the Dutch Central Bank's Deposit Guarantee Scheme for sums up to 100,000 euros (around £80,000).
Meanwhile, Santander’s eSaver Issue 5 pays 3.2% and can be opened with as little as £1. It includes a variable rate bonus of 2.7% for the first 12 months and is available online and over the phone.
Accounts with top rates typically include a hefty 12-month bonus, leaving your rate of interest to dwindle once that period is over. So always remember to switch your savings after the bonus comes to an end.
Top of the table for easy access
|
Account |
Interest Rate AER |
Minimum Deposit |
Withdrawal limits |
Bonus |
|
ING Direct Savings Account |
3.24% |
£1 |
Unlimited |
2.69% |
|
Santander eSaver Issue 5 |
3.20% |
£1 |
Unlimited |
2.70% |
| krbs Direct Savings Account | 3.20% (variable) | £1,000 | Unlimited | - |
|
AA Internet Extra (Issue 7) |
3.07% |
£20,000 |
Unlimited |
2.57% |
| GE Capital Direct GE Bonus Saver Issue 2 | 3.06% | £500 | Unlimited | 1.56% |
|
3.06% |
£1,000 |
Unlimited |
2.06% |
|
|
3.06% |
£1,000 |
One penalty-free withdrawal a year |
1.52% |
Make the most of your ISA allowance
Don’t forget there are Cash ISAs that act like easy access accounts – with unlimited penalty-free withdrawals. They’re tax free too and in some cases will beat the rates on easy access accounts. You can save up to £5,640 in a Cash ISA during the 2012/13 tax year so maximise your allowance and that of a partner or spouse too.
Santander offers 3.3% on its Direct ISA Issue 9 (with a 12-month 2.8% bonus) and allows unlimited withdrawals without penalty, but you will need a minimum deposit of £2,500. Transfers in from another ISA are allowed.
Alternatively you can save as little as £1 with ING Direct’s Sash ISA, paying 3% with no loss on the interest rate when you withdraw cash.
Beating inflation
Aim for an instant access account that beats inflation. This wasn’t possible until a fall in the rate of inflation earlier this month and now several easy access accounts are offering a real return on the value of your savings. Read more in Good news for savers as inflation falls to 2.4%.
More on savings
ING Direct and AA reprice easy access savings accounts
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