Savings Accounts With Strings Attached

These savings accounts claim to offer easy access or no notice. However, they punish you when you take money out!

Instant-access and no-notice savings accounts are hugely popular with savers, because they are ideal homes for rainy-day money and emergency funds. If you suddenly need to withdraw some cash, you know it's there waiting for you as and when you need it. So, how would you feel if you had to pay a penalty every time you tapped into your funds?

Alas, in the sly world of financial-services marketing, words don't always mean what they say. You'd expect `instant access' and `no notice' accounts to give you immediate, penalty-free access to your money. In reality, several so-called easy-access accounts penalise you for dipping into your nest egg!

According to Fool partner Moneyfacts, nearly one in four easy-access accounts has sneaky strings attached when it comes to withdrawals. Some accounts allow only a limited number of withdrawals each year. Others pay no interest or a lower rate of interest in any month during which a withdrawal is made. Even worse, a few will close down your account if you dip into your stash too often.

Take a long, hard look at the following table, because these so-called 'instant access' accounts make you pay a high price for withdrawals:

*Account*	*Rate on £10k* *(% AER)*	*Withdrawal* *restrictions*
Britannia Building Society HomeSaver	7.25	Lose 90 days' interest unless withdrawal used as a deposit for a Britannia Building Society mortgage.
Abbey eSaver Direct	6.50	Rate drops to 2.75% in month of withdrawal.
Alliance & Leicester eSaver	6.31	No interest paid for month in which withdrawal made (except for July, when withdrawals are free).
Citibank Reward Saver Issue 2	6.20	No interest paid for month in which withdrawal made.
Halifax Web Saver Extra	6.10	One penalty-free withdrawal a year, then further withdrawals on loss of 30 days' interest.
Heritable Bank Easy Access Issue 2	6.06	Six free withdrawals a year, then further withdrawals on loss of 30 days' interest.
Birmingham Midshires Online Saver	5.83	No interest paid for month in which a withdrawal is made.
Mansfield BS Postal Tracker Three Issue 2	5.10	Three free withdrawals a year, then further withdrawals on loss of 180 days' interest.

Source: Moneyfacts, 18/04/08

As you can see, making a single withdrawal can mean forfeiting a month's interest on your entire balance. Thus, a modest withdrawal could mean losing a twelfth of a year's interest on your remaining funds.

This seems blatantly unfair and, in my view, accounts in the category that claim to be `instant access', `easy access' or `no notice' are, in fact, deceiving savers!

Best Buys with no strings attached

When choosing a home for your cash, do check the small print before handing over your hard-earned loot. Otherwise, you could be out of pocket, thanks to wily withdrawal penalties. Indeed, Leeds Building Society will actually close your account if you make more than two withdrawals in a year from its Premium Access and Postal Max accounts!

Thankfully, there are a few no-strings savings accounts that pay high rates of interest while giving you unlimited access to your pot. Here are five of my favourites:

Account	Interest Rate (% EAR)	Minimum Deposit (£)
Birmingham Midshires e-Saver	6.50	1
Kaupthing Edge Savings Account	6.50	1000
FirstSave Easy Access	6.26	100
ICICI Bank UK HiSAVE	6.16	1
Bradford & Bingley Internet Saver Issue 2	6.15	1
Icesave Easy Access Savings	6.05	250

Source: Fool.co.uk's independent, unbiased savings search engine

In summary, don't be suckered into a savings account by fancy marketing and headline-grabbing interest rates. Make sure the account is right for you before depositing your money!

More: Find a superior savings account today | Six Cracking Cash ISAs | Earn 7.25% Interest On Your Children's Savings