Does This New Savings Account Stack Up?

We put Halifax's new Guaranteed Saver account to the test by comparing it to five top high-interest savings accounts.

Halifax (and its sister company, Bank of Scotland) have just launched a new instant-access savings account which offers a high rate of interest. Here are the details:

Name: Halifax Guaranteed Saver
Access: instant access via branch or cashcard, plus telephone and Internet access
Minimum deposit: £5,000
Before-tax interest rate: 4.5% a year (3.5% for savers without a Halifax/BoS current account funded with at least £1,000 a month)
Guarantee: will pay not less than the Bank of England's base rate until 16/07/08 (base rate less 1% for savers without a Halifax/BoS current account funded with at least £1,000 a month)
Withdrawal restrictions: Four penalty-free withdrawals per year, then 30-day loss of interest on subsequent withdrawals

As you can see, this account offers instant access combined with a high rate of interest. However, take away the preferential rate offered to HBOS current-account holders (an extra 1% a year) and it becomes a decidedly mediocre account. Also, for savers without an HBOS current account funded with at least £1,000 per month, the pre-tax annual interest rates for balances below £5,000 are pretty feeble (0.65% AER on £50+ and 1.95% AER on £500+), so this account is strictly for big balances.

Therefore, unless you have an HBOS bank account or are prepared to open one and pay in at least £1,000 a month, this account isn't for you. Then again, the new High Interest Current Account which Halifax/Bank of Scotland launched last month is a cracking Best Buy, so it's well worth adding to your shopping basket.

Now let's look at Best Buy alternatives to the above account. Normally, to earn high rates of interest, you need to use a savings account which is operated by Internet, telephone or post. The truth is that instant-access savings accounts which enable you to withdraw cash via a cashcard usually don't pay very attractive rates. However, with the help of independent financial researcher Moneyfacts, I've found the following great rates:

Best Buy instant-access savings accounts with a cashcard

Provider/Account name	Interest rate	Comments
Coventry BS Family First Saver Account	5% AER on £1 to £500,000	Rate includes bonus of 0.50% for a year. Base-rate guarantee for 18 months. Must pay in Child Benefit direct from HMRC. Minimum withdrawal £250 at branch.
Abbey eSaver	4.85% AER on £1 to £49,999	Rate includes bonus of 0.50% for 6 months. Maximum daily withdrawal limit of £300 from cash machines.
Citibank Flexible Saver	4.83% AER on £10,000 to £1m	Rate includes bonus of 0.5% for 6 months. Maximum daily withdrawal limit of £300 from cash machines.
Post Office Instant Saver	4.75% AER on £500 to £1m	Rate includes bonus of 1% for a year. Will match base-rate rises until 01/01/08, then rate not less than 1% below base rate. Six free withdrawals a year, then £1 each
Yorkshire BS Internet Saver	4.70% AER on £1 to £1m	Not less than base rate until 28/02/07

Finally, if you want to be a really successful saver, don't dip into your savings at will. If you can wait the three days or so it takes to withdraw payments via banking-payments system BACS, then these easy-access accounts will be right up your street. The best of these, ICICI Bank's HiSAVE account, pays a generous 5.15% AER on as little as £1, with no strings attached!

More: Use the Fool to compare savings accounts, compare current accounts and compare credit cards!

Disclosure: Cliff owns shares in HBOS, parent company of Halifax and Bank of Scotland.