Royal Bank of Scotland launches Savings Builder Account paying 1.5%

RBS has launched an 'easy access' account that pays a table-topping 1.5% – and you can bank in branch. However, you'll likely be better off putting your money elsewhere...

Good news for savers: the Royal Bank of Scotland has launched two new types of savings account.

You could earn an interest rate of 1.5% while retaining access to your funds with the Savings Builder account, making it the joint-best access account on the market in terms of rate.

However, this is an access account with a very big string attached: to qualify for the rate, you have to top up the account with at least £50 (hence the name 'Savings Builder') or the rate falls to a big, fat zero.

The headline rate is also limited to the first £10,000 in the account, falling to just 0.2% thereafter. 

For savers with a larger pot, RBS has launched a Premium Saver Account that pays 0.85% on balances between £50,000 and £1,000,000, provided you don’t withdraw any money.

It's an innovative and encouraging move from a bank that has spent 2018 largely on the defensive, closing dozens of branches.

But is it the best choice for savers? We’ve taken a closer look at the two accounts and the alternatives out there.

You’ll need an RBS Current Account

To apply for either the Savings Builder Account or Premium Saver Account you’ll need an RBS current account.

This need not be the end of the world, however – in fact, you can currently earn £125 by switching.

RBS’ Select Account has no monthly fee, whereas the Reward Account has a £2 monthly fee, which should be made up for by 2% cashback on household bills.

Find out more about RBS current accounts and the £125 offer here.

Savings Builder Account

The Savings Builder Account is effectively a combination of an easy access account and a regular savings account, so it's against these two products that we'll compare it.

First off, the rate of 1.5% can easily be beaten: you could earn 5% with regular savings accounts from First Direct, HSBC, M&S Bank and Nationwide.

Of course, regular savers are extremely restrictive: only get one if you’re confident that you can meet the minimum top-up requirements (usually a minimum of £25/month), and won’t need the money, because any withdrawal means you lose the whole year’s interest.

What's more, they don't allow you to make a lump sum deposit up front.

RBS’ Savings Builder, on the other hand, allows both deposits and withdrawals.

And if you don’t manage to raise the balance one month, you only get penalised for one month's interest.

Now let's look at how it stacks up against the top easy access accounts.

It's possible to match the headline interest rate of 1.5% with a no-strings-attached account from Goldman Sachs called Marcus, which was launched last month.

The Marcus account is also better for larger balances, paying the full rate up to £250,000, whereas RBS will only offer you 1.5% up to £10,000.

Finally, it's available to everyone: no current account required.

That only leaves RBS’ account with one major advantage: you can manage it in branch or telephone and even withdraw money in branch as cash.

If branch banking is important to you, then 1.5% is light years ahead of what you’re likely to get elsewhere.

Premium Saver Account

Being able to bank in branch is also the major advantage of the Premium Saver Account.

Unfortunately, it’s difficult to be so positive about this account.

That’s because its top interest rate – for balances between £50,000 - £1 million, when you don’t withdraw – is just 0.85%.

If you’ve got a large savings balance, you’d be much better off with Marcus’ Online Savings Account, up to £250,000, or Tesco Bank’s Internet Saver account, which pays 1.4% up to £1 million.

Or you could earn an expected rate of 2.02% with ICICI Bank by locking your money away for one year.

Compare easy-access and fixed rate savings accounts here