Five top easy access savings accounts

Serena Cowdy separates the wheat from the chaff to find the best savings account for you.

A few days before the general election, our economic future is looking particularly uncertain. Most Britons are now aware of how important it is to have a savings pot; but of course, it’s not quite as simple as that.

Many people would like to start saving, but know they might have to call on their emergency stash at any time. If you fall into this category, an easy access savings account could be the right choice for you.

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What to look for

If you’re on the lookout for a new easy access savings account, you’ve got to focus on more than just the interest rate. Here are three other factors to consider:

Ease of access: Certain ‘easy access’ accounts are anything but. Some limit the number of withdrawals you can make, or penalise you with a big drop in your interest rate if you overstep the mark.

Here, I’m going to be focusing on truly easy access accounts. That is those which impose no withdrawal restrictions.

Fixed versus variable: Most easy access accounts operate variable rates of interest. That means these rates could drop at any time. However, certain rates include a fixed bonus element for the first year.

This is the section of the rate that will definitely not drop during that period; so the bigger the fixed element, the better. Just remember that most easy access rates will become very uncompetitive after the first year, so that’s the time to find a new account.

Product ties: You may come across savings accounts you can only apply for if you take out another financial product with the same provider (for example, a pension or investment plan).

These linked products are usually mediocre at best, and should therefore be avoided. I’m going to concentrate on accounts that come with no such strings attached.

My five top picks

Here are my top five easy access picks. All rates are variable unless otherwise stated:

A closer look

Let’s have a look at each of my choices in a bit more detail:

My top pick is the Internet Extra Account, from the AA. It pays the highest rate of any ‘no restrictions’ easy access account, offering 2.8% AER.

As with all my choices, you can start saving from just £1; and it includes a large fixed bonus rate of 2.3% for the first 12 months. Just remember that this account can only be operated online.

• Watch our Make 2010 the year to save video.

If you want complete peace of mind, my second choice might be the account for you. The ING Direct (UK) Savings Account pays 2.75% AER, and - unlike any of the accounts in the table - the entire rate is fixed for the first year.

This account is also slightly more flexible than the AA’s offering, as it can be operated over the phone as well as online. On the downside, it's only available to new ING Direct Savings Account customers.

In third place is the Telephone Extra (Issue 2) from Birmingham Midshires. This also pays 2.75% AER, but has a fixed 12 month bonus rate which only ‘guarantees’ 2.25% of that.

Also bear in mind that this account can only be operated over the phone, so fans of online banking may find it frustrating.

Next on my list is the online-only Tesco Bank Internet Saver. This offers the same decent rate of 2.75% AER, but in this case the fixed 12 month bonus is just 1.5% on balances of up to £100,000.

That means you’re only guaranteed a rate of 1.5% during the first year; which is why I don’t think it’s as good as my first three choices.

Finally, I’ve chosen the Norwich & Peterborough BS E-Saver (Issue 3). This also pays 2.75% AER, and the fixed bonus element is actually slightly higher (at 1.55%) than that of the Tesco account.

However, there are two reasons this account comes in last place. First, that 1.55% bonus is conditional on the account being open for one whole year; if the account is closed at any time other than on the anniversary date of account opening, no bonus will be paid.

Second, any money put into your E-Saver must come from a non N&P account. These are just the sort of complications that give savers a bit of a headache, so - despite the decent rate - this account comes at the bottom of my list.

Other options

Of course, an easy access account may not be the right savings option for you. If you’re able to squirrel away money for a year or more without touching it, it may make sense for you opt for a term or bond account.

Alternatively, a regular savings account will encourage you to save a set amount every month, whilst giving you a very decent rate of interest.

Good luck!

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